Hong Kong Raises Tobacco Tax by 6 Cents

The Financial Secretary of the Hong Kong Special Administrative Region, Paul Chan Mo-po, announced during the presentation of the 2023-2024 government budget that the tobacco tax on each cigarette will be raised by 6 Hong Kong cents (about 0.77 US cents). This means that the retail price for a pack of 20 cigarettes will increase by HK$12 (about $1.54). The tax rate on other tobacco products will also increase by the same proportion, which is about 31.4%. Chan Mo-po pointed out that the tobacco tax has not been adjusted for over a decade, and this tax increase is expected to reduce smoking and encourage people to quit. However, he did not mention how much revenue this tax increase is expected to generate for the government.

In the previous financial year, tobacco tax revenue amounted to 7.89 billion yuan.

Currently, the tobacco tax rate in Hong Kong is set at HKD 1,906 per 1,000 cigarettes (approximately HKD 1.9 per cigarette), HKD 2,455 per kilogram for cigars, HKD 468 per kilogram for Chinese-style tobacco, and HKD 2,309 per kilogram for other manufactured tobacco products. A pack of 20 cigarettes currently retails for around HKD 60 (approximately RMB 52.7), with HKD 38 (approximately RMB 33) being the tax amount. This means that taxes make up approximately 62% of the cigarette price.

The last time the tobacco tax was increased in the Hong Kong Special Administrative Region was during the 2011-2012 fiscal year, when the tax rate was raised by 41.5%. The previous increase occurred during the 2009-2010 fiscal year, with a hike of 50%. In the 2021-2022 fiscal year, the government expects to generate 7.89 billion Hong Kong dollars in revenue from the tobacco tax alone.

Secretary for Financial Services and the Treasury, Paul Chan, announced in the Budget Plan that Hong Kong's current tobacco tax accounts for only around 62% of retail prices, which is far below the World Health Organization's recommended 75%. To address this, the government will increase tobacco tax by HKD 6 per cigarette, with the goal of reducing the smoking rate from the current 9.5% to 7.8%. The government also stated it will enhance efforts to promote smoking cessation and enforcement against illicit tobacco trade.

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Under the proposed financial budget plan, tobacco taxes will increase by approximately 30%. This would result in a price increase of 12 yuan per pack of cigarettes.