Secretary for Health responds to revenue adjustments for tobacco duty and rationale for increased duty in latest budget

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10th April 2024 – (Hong Kong) In response to a question raised in the Legislative Council today, the Secretary for Health, Professor Lo Chung-mau, provided a detailed reply on behalf of the Hong Kong government. The question pertained to the downward adjustment of revenue estimates for tobacco duty in the 2023-2024 financial year, as well as the rationale behind the government’s decision to increase tobacco duty in the 2024-2025 Budget.

The government acknowledged the importance of addressing smoking-related health issues, particularly in light of an ageing population and the rising number of chronic disease patients. Smoking remains a significant risk factor for chronic diseases and deaths, and despite a decline in smoking prevalence in Hong Kong over the years, there are still approximately 580,000 daily smokers, many of whom belong to the lower-income bracket. The government emphasized the need to minimise the adverse effects of smoking on society and bridge the health and economic disparity caused by tobacco use.

To combat smoking, the government announced a tobacco duty increase in the 2024-2025 Budget, marking the first consecutive increase in 20 years. The aim of this measure is twofold: ensuring that cigarette prices remain at a level that discourages smoking and conveying a strong commitment to public health. Increasing tobacco duty is internationally recognized as an effective measure to reduce tobacco use, and studies have shown that higher cigarette prices lead to a decrease in tobacco consumption.

The government’s decision to adjust revenue estimates for tobacco duty in the 2023-2024 financial year was based on multiple factors, including the level of duty, pricing strategies of tobacco companies, and the overall economic situation. The government anticipates that the increase in tobacco duty in 2024 will further reduce the demand for tobacco products. The estimates for future revenue were also influenced by the World Health Organisation’s estimation of the impact of increased tobacco retail prices on cigarette demand.

Regarding concerns about the illicit cigarette market, the government highlighted that there is no direct correlation between tobacco duty increases and illegal tobacco trade activities. Combating illicit cigarettes and raising tobacco duty are viewed as complementary measures. The government emphasised its commitment to combatting illicit cigarettes through strict enforcement actions and collaboration with relevant authorities.

To further reduce smoking prevalence, the government conducted a public consultation on tobacco control strategies in 2023. The Health Bureau is exploring phased approaches to implement various tobacco control measures and intends to provide further updates on future actions.