STUDY COMMISSIONED BY GLOBAL BIG GUNS URGED HONG KONG TO CUT SPIRITS TARIFF
By Susan Lewis
Despite having got rid of wine tariff in 2008, Hong Kong still levies a 100% tariff on spirits. A recent study suggests that a spirits tariff cut can bring HKD1billion (USD133m) worth of economic benefits, boost spirits auction and create some 930 jobs.
Entitled “Study on Spirits Tax Reform and Economic Benefits”, the study was conducted by Prof Waiman Cheung of HKCU Business School and was commissioned by the Asia Pacific International Wine and Spirits Alliance (APIWSA).
The APIWSA is a pan-Asia trade association comprising of the 10 global wine and spirits producers, including Diageo, Beam Suntory, Bacardi, Moet Hennessy, Pernod Ricard and Remy Cointreau.
The study proposed a reform of Hong Kong’s tariff on spirits (bottled strength of 30% ABV or higher). Instead of leving 100% of product price, it suggested the government to tax according to alcohol volume, at HKD75 per litre of alcohol.
Prof Cheung said the international market place of spirits is highly vibrant and very competitive, top markets like USA, UK and Taiwan have in recent years cut their tariffs. Despite being a global wine trade hub, Hong Kong’s spirits tariff has remained stagnant for years.
He argued that the current scheme has deterred producers of high quality artisan spirits to enter the Hong Kong market.
The study predicted the proposed tariff to boost the Hong Kong spirits trade by HKD738m and will encourage collectors to bring their premium spirit collections to the Hong Kong auction market.
It said Hong Kong’s general economy will also benefit from the knock-on effects, some 930 jobs will be created in the tourism and catering sectors further boosting the economy by HKD360m.
Prof Cheung said he will meet Hong Kong’s trade bodies and relevant government officials to present to them the findings of his study.
(the writer can be contacted at: SusanLewis@thewinechronicle.com)
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