1st April 2023 – (Hong Kong) In a bid to curb smoking, the Hong Kong government increased tobacco tax by over 30% in the latest budget announcement. However, this move seems to have backfired as it has led to a surge in the sale of illegal tobacco products. The price gap between legally sold and untaxed illegal tobacco products has widened, prompting smokers to switch to cheaper alternatives like illicit cigarettes or e-cigarettes.
In just three weeks since the tax hike, Hong Kong customs has seized over 68 million suspicious illegal cigarettes and approximately 6kg of untaxed tobacco products. This seizure figure is higher than the total amount of illegal tobacco products seized in the entire years of 2018 and 2019. This surge in illegal tobacco sales is a major concern for the government as it poses a significant threat to public health and national revenue.
Illegal tobacco syndicates are taking advantage of the situation by ramping up their promotion of illicit products. Flyers promoting illegal tobacco products. What’s more alarming is the emergence of illegal tobacco websites openly flouting the law by luring smokers into the illicit market. One such website, GOGOSMOKE, advertises tobacco products with prices as low as HK$22-28 per pack, well below the tax-inclusive price. These websites are indirectly admitting to evading Hong Kong customs duty and are violating the “Dutiable Commodities Ordinance,” which carries a maximum penalty of two years imprisonment and a fine of HK$1 million.
The websites are promoting obscure, unbranded tobacco products as an alternative to mainstream cigarette brands. Some of the websites claim that these “white-label” products are even better in quality than popular brands like Marlboro. The illicit websites also offer “free samples” of the products. This blatant advertising of tobacco products on the internet is prohibited under Hong Kong’s Smoking (Public Health) Ordinance. Legal experts suggest that these websites may have already breached the ordinance by enticing, recommending, and encouraging the purchase or use of tobacco products.
Lam Cheung-foo, chairman of the Hong Kong Newspaper Hawker Association (HKNHA), has expressed his anger at illegal traders taking advantage of the price difference and enticing smokers to buy illegal cigarettes. These actions not only disregard the ban on tobacco advertising but also refuse to pay tobacco taxes, openly challenging Hong Kong law and severely harming law-abiding traders in an unfair competitive environment. Lam is concerned that after the full implementation of the border checkpoint, smuggling activities such as “ant moving” will return and the problem of illegal cigarettes in Hong Kong will become more rampant. He said, “When cigarettes cost $50 per pack, many smokers would bring in two or three duty-free cigarettes when entering the border. Now that the price has risen to $80 per pack, more people will definitely take the risk. After the full implementation of the border checkpoint, smugglers will take advantage of the busy checkpoint and mix smuggled goods with normal goods to enter the border.”
Lam also pointed out that during the consultation period of the financial budget, the HKNHA has expressed concerns to the authorities many times. The tax increase will exacerbate the problem of illegal cigarettes, which will not help tobacco control but will also harm the livelihoods of tobacco vendors. As a result, Lam believes that it is time for the authorities and tobacco control groups to take action and fulfil their promises to prevent these illegal activities, increase public awareness of combating smuggling crimes, and bring these criminals to justice to reduce the harm of smoking and tobacco.