Hong Kong’s leader announced a cut in liquor taxes on Wednesday, in a bid to revive the Asian financial hub’s reputation as a travel destination with a vibrant nightlife and dining scene.
After fulfilling Beijing’s long-standing imperative to enact a homegrown national security law, which has furthered concerns about the curtailing of civil liberties in the city, Chief Executive John Lee now faces challenges with economic competitiveness against regional rivals like Singapore, Japan and mainland Chinese metropolises.
Changes in residents’ lifestyles and a wave of middle-class emigration during the COVID-19 pandemic have dampened local spending. Many residents now prefer to spend their weekends in mainland China, attracted by its lower prices and a wider variety of entertainment options. Meanwhile, visitors from the mainland are spending less in the city than before.
Vacant shops are commonly seen in the city’s most popular shopping districts, and revenue at the city’s bars was down about 28% in the first half of 2024 from the same period in 2019, preliminary official data showed.
In his annual policy address, Lee said the duty rate for spirits with an import price of more than 200 Hong Kong dollars (about $26) would be slashed from 100% to 10% for the portion above that price starting Wednesday. He said he hoped it would foster the logistics, storage, tourism and high-end dining industries.
The government previously told lawmakers that after wine duties were abolished in 2008, imports jumped 80% in a year and the city welcomed hundreds of new wine-related businesses.
Lee highlighted the city’s various global rankings near the end of his speech at the legislature, but said past performance does not guarantee future success.
Simon Lee, an adjunct faculty member in finance at The Chinese University of Hong Kong, Shenzhen, said slashing taxes on liquor will help stimulate trades of spirits. But he added that the impact on tourism and bar businesses isn’t expected to be significant because the numbers of those consuming strong alcohol may be limited.
Lee, the city’s leader, also pledged to turn the city into an international hub for post-secondary education by offering scholarships to overseas students, and promised moves to develop the “silver economy” and “low-altitude economy” — Beijing’s buzzwords for markets like elderly care, private aviation and drones. He also announced plans to build an international gold trading market and create a “new commodity trading ecosystem.”
Lee also proposed to regulate the city’s subdivided flats, which are notorious for their tiny size and poor living conditions but provide a relatively affordable housing option in one of the world’s most expensive housing markets. (AP)
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