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Jiang Chuqin

Lo Hoi-ying

Hong Kong has slashed the liquor tax on spirits with over 30 per cent alcohol content and an import price above HK$200 (US$26) after Chief Executive John Lee Ka-chiu unveiled the move in his latest policy address.
The cut aims to boost the high-end spirits market, with hopes that it will also benefit the tourism and restaurant sectors.
But not everyone is raising a glass to the news, with doctors and former health officials expressing concerns about it leading to increased alcohol consumption.
The Post examines the potential impact of the move and why opinions are so divided.
1.⁠ ⁠What is the latest policy?
The tax rate was previously 100 per cent on liquor with more than 30 per cent alcohol content, regardless of the price.
Under the new policy, the first HK$200 will still incur a 100 per cent duty, while the portion above the import price threshold will be taxed at a much lower rate of 10 per cent, making for potentially substantial savings on more expensive spirits.
For example, if a bottle of whiskey is imported at HK$300, the previous 100 per cent tax would amount to HK$300, bringing the final price up to at least HK$600.
But under the new structure, the first HK$200 is unchanged, while the remaining HK$100 is taxed at 10 per cent, resulting in an additional HK$10 in duty. This brings the overall cost to HK$510, or HK$90 cheaper than before.
If the original import price is HK$2,000, the 10 per cent rate will apply to the HK$1,800 above the threshold, adding only HK$180 in extra duty. This brings the price to HK$2,380, a reduction of HK$1,620 compared with the previous policy.

2.⁠ ⁠What is the debate?
More than 100 healthcare professionals, including lawmaker David Lam Tzit-yuen and former health secretary Sophia Chan Siu-chee, signed a petition before the policy address on Wednesday opposing the cut to the liquor duty.
The petition said there was no safe level of alcohol consumption and more drinking would lead to further challenges for the healthcare system.
But city leader Lee said on Thursday that 85 per cent of spirits sold on the market would not be affected, as the move was aimed at promoting luxury liquor trading.
“I don’t encourage drinking and neither does our policy,” Lee said.
He told a radio show the changes would have little impact on consumer prices because liquor on the retail market would have been marked up by two to three times to cover other costs such as rent and manpower.
Secretary for Health Lo Chung-mau, a top liver transplant expert, also threw his weight behind the policy, saying the opinion of the healthcare sector had been taken into account.
“The two-tier tax regime is a targeted policy and will only affect 15 per cent of luxury liquor, our assessment found its impact on the retail price and the local alcohol consumption to be limited,” Lo said.
He said the scrapping of the wine duty in 2008 substantially increased the import value by 10 times, while average consumption of the product declined, despite a temporary surge initially.
Lo added authorities would step up efforts to promote information about the harms of alcohol abuse and would provide services to help residents suffering from addiction issues.


3.⁠ ⁠What does it mean for drinkers and businesses?
A number of food and drinks industry groups expressed dissatisfaction, saying the cut would not improve the sector’s competitiveness.
Such organisations included the Hong Kong General Chamber of Wine & Spirits, the Hong Kong & Kowloon Provisions, the Wine & Spirit Dealers’ Association and the Hong Kong Food, Drink & Grocery Association.
Henry Ho Yiu-hong, president of the Hong Kong Wine and Spirits Association, said the pricier the spirits, the greater their possible reduction in retail price.
“It’s a pity that the tax cut will not benefit lower-priced liquor, therefore the much-anticipated stimulus to the local food and drink industry will be limited,” Ho said.
Most hard liquor in the market, or 85 per cent of spirits, was priced under HK$200.
“So [the benefit] is limited to private clubhouses and high-end whisky bars serving rare whiskies. It’s not something common. They’re quite niche,” Ho said.
He added that those who consumed such spirits “wouldn’t mind” whether prices changed.
4.⁠ ⁠What is the potential impact on the economy?
The previous 100 per cent tax rate was among the highest in the world.
Macau imposes a consumption tax of 10 per cent on the cost, insurance and freight value, plus an additional fee of 20 patacas (US$2.5) per litre for drinks with more than 30 per cent alcohol content. In mainland China, the tax rate of spirits ranges from 15 per cent to 25 per cent.
Some sources said the recent tax cut could reduce government revenue by HK$200 million, but authorities were optimistic about achieving benefits similar to those seen after the wine duty was lifted in 2008.
In 2007, the government halved the 80 per cent duty on wine, eventually abolishing it completely in 2008. According to Financial Secretary Paul Chan Mo-po, the total value of wine imports surged by 375 per cent from 2007 to 2023, while the volume increased by 33 per cent.
Additional reporting by Emily Hung


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Drinkers with a taste for pricier spirits will benefit most from new framework, but health concerns are also top of mind


Drinkers with a taste for pricier spirits will benefit most from new framework, but health concerns are also top of mind.


Hong Kong society

John Lee

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Explainer | How does Hong Kong’s liquor tax cut work and why are some finding it hard to swallow?

Drinkers with a taste for pricier spirits will benefit most from new framework, but health concerns are also top of mind

1.⁠ ⁠What is the latest policy?