Replies to LegCo questions

LCQ14: Duty on tobacco and tobacco products

Following is a question by the Hon Martin Lee and a written reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (July 9):

Question:

Regarding the duty on and prices of tobacco products, will the Government inform this Council:

(a) whether it knows the average prices of tobacco products, their actual average prices after adjustment for inflation and the changes in their sales before and after the relevant provisions of the Smoking (Public Health) (Amendment) Ordinance came into operation on January 1, 2007;

(b) given that the prices of tobacco products have increased at a lower rate than inflation in recent years, resulting in a consistent rise in the sales of tobacco products, whether the authorities will consider increasing the tobacco duty to drive up the prices of tobacco products, so as to curb the growth in their sales; and

(c) whether the authorities will consider allocating a certain percentage of the revenue from the tobacco duty for smoking cessation services, anti-smoking work as well as treatment of and researches on smoking-related diseases?

Reply:

Madam President,

My reply to the various parts of the question asked by Hon Martin Lee is as follows:

(a) According to the statistical data compiled by the Customs and Excise Department (C&ED) on 22 brands of cigarettes sold in Hong Kong, the average retail price of these tobacco products was HK$26.4 in October 2006. In May 2008, i.e. 18 months after the vast expansion of no-smoking areas, the average retail price of these 22 brands of cigarettes was HK$26.9. Their actual average market price in 2008 after discounting inflation (at 2006 prices) was HK$25.2.

We do not have any sales figures of tobacco products. Nevertheless, the C&ED recorded a total of 287.493 million sticks of duty-paid cigarettes in October 2006 while the latest figure (as at May 2008) was 288.936 million sticks.

(b) The HKSAR Government has been taking a multi-pronged approach, i.e. through a combination of legislation, taxation, publicity, education, enforcement as well as smoking cessation services, to contain the proliferation of tobacco use and minimise the impact of passive smoking on public health. Since the passage of the Smoking (Public Health) (Amendment) Bill 2005, many more smoke-free areas have been created in Hong Kong and the public are now enjoying a generally healthier environment. Most smokers have also been law-abiding and co-operative, not smoking when they are indoors or when smoking affects others. We believe that the situation will improve further after the fixed penalty system for smoking offences is in place.

With regard to the question of increasing tobacco duty, the Government will review the rates of various taxes and duties in the annual Budget exercise after taking into consideration factors such as public finance, economic conditions and relevant policies. We will continue to monitor tobacco use and its impact on public health and take these into account when we consider whether the rate of tobacco duty has to be revised.

(c) Under the Government's long-standing principles of public finance management, the revenues from tobacco duty, similar to other tax revenues, will be credited to the General Revenue. The Government will then make appropriate allocation of resources based on actual requirements for expenditure through the annual Resource Allocation Exercise to ensure fair and reasonable allocation of resources among various policy areas. If it is rigidly laid down that a certain proportion of a particular item of revenue has to be designated for a particular use, this will undermine our well-established resources allocation mechanism and erode its flexibility.

As a matter of fact, the Government has in recent years devoted more financial resources every year to tobacco control. The funding allocation for the Tobacco Control Office (TCO) under the Department of Health (DH) and the Hong Kong Council on Smoking and Health (COSH) has increased from $18.5 million in 2003-04 to $55.4 million in 2007-08, representing a three-fold increase within 4 years. Where the provision of smoking cessation services is concerned, both DH and the Hospital Authority have stepped up their efforts by setting up more smoking cessation clinics, establishing the Smoking Cessation Hotline and enhancing their counselling and referral services. Looking into the future, DH will provide more smoking cessation services at the district level by working more closely together with non-governmental organisations and healthcare practitioners in the private sector.

The Government will continue to promote smoking cessation through the Council of Smoking and Health (COSH) and at the district level. We also believe that opportunities should be taken to provide smokers with information on smoking cessation services through enforcement of the fixed penalty system. To that end, we will print the Smoking Cessation Hotline number of the TCO on fixed penalty notices. Information on smoking cessation services will also be provided together with the issuing of payment reminders.

As for research, the Government has been providing funding to COSH for conducting research and surveys on a number of smoking-related topics such as "Youth Smoking and Health Survey", "Smoking and Passive Smoking in Children" and "Passive Smoking and Risks for Heart Disease and Cancer in Hong Kong Catering Workers" etc. The Government will continue to provide funding support to research in the area of tobacco control. It is therefore apparent that the Government will provide adequate financial resources for taking forward our tobacco control policy in the interest of public health without making it a rule that tobacco duty revenues must be spent on tobacco control purposes.


Ends/Wednesday, July 9, 2008
Issued at HKT 12:06

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