Letters | Why not set a minimum price for cigarettes to further deter users?
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Frequent smokers often turn to unauthorised supply channels, such as online vendors who import low-cost cigarettes from elsewhere without paying Hong Kong duties. Investigations by Hong Kong customs reveal that some importers procure large volumes of duty-not-paid cigarettes by dishonestly declaring smaller consignments of duty-paid ones. As a result, unprincipled sellers can offer cigarettes at artificially reduced prices, such as HK$20 per pack, while falsely asserting that they are duty-paid.
The current plan includes the introduction of duty-paid labels. I suggest an additional measure to decrease tobacco consumption: the implementation of a price floor and the capping of profit margins on each pack of cigarettes through ad valorem duties.
Here’s the essence of the proposal: the government would set a minimum selling price for each pack of tobacco, penalising sellers and buyers who transact below this benchmark. To avoid rewarding sellers with increased profits, the government would also impose a maximum profit margin on each cigarette sold, enforced through ad valorem duties.
This proposal offers benefits in two key areas. Firstly, if the price floor and ad valorem duties prove effective, a greater number of smokers and sellers could be dissuaded from trading in tobacco. Additionally, controlling illicit tobacco could become easier: the government could simply penalise illegal traders by comparing the trading price and profit margin against its benchmarks.
