21
WEDNESDAY, FEBRUARY 27, 1985
DUTY FREE CONCESSIONS REVISED
****
THE DUTY FREE CONCESSION FOR LOCAL RESIDENTS RETURNING TO HONG KONG WILL BE LIMITED TO 100 CIGARETTES AND ONE LITRE OF WINE, WITH EFFECT FROM APRIL 1, UNDER A PROPOSAL CONTAINED IN TODAY'S BUDGET.
THE CONCESSION GIVEN TO OVERSEAS VISITORS WILL REMAIN AS 200 CIGARETTES AND ONE LITRE OF WINE OR SPIRITS.
THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID THAT WHILE THERE WERE NO FIRM STATISTICS AVAILABLE ON THE EXTENT TO WHICH RETURNING TRAVELLERS WERE AVAILING THEMSELVES OF THE EXISTING ALLOWANCE PROVIDED BY THE COMMISSIONER OF CUSTOMS AND EXCISE THERE APPEARED TO HAVE BEEN A CONSIDERABLE INCREASE CONSEQUENT ON THE INCREASES IN THE RATES APPLIED TO DUTIABLE COMMODITIES IN THE 1983 AND 1984 BUDGETS.
+CONSUMER RESISTANCE TO PRICE INCREASES RESULTING FROM HIGHER DUTY ON TOBACCO AND LIQUOR HAS ACCOUNTED FOR SOME FALL IN REVENUE YIELDS, BUT THERE CAN BE LITTLE DOUBT THAT A SIGNIFICANT CONTRIBUTORY FACTOR IS THE VERY LARGE INCREASE IN THE NUMBER OF RETURNING PASSENGERS AVAILING THEMSELVES OF THE FULL DUTY FREE CONCESSION.
+ INDEED IN GOOD HONG KONG FASHION SOME TRAVELLERS ARE REPORTEDLY SO ENGAGED FULL-TIME. FOR EXAMPLE, THE DUTY PAID ON TOBACCO IN 1983-84 DECREASED 26 PER CENT ON THE PREVIOUS YEAR. IN THE FIRST SIX MONTHS OF THIS FINANCIAL YEAR THE DUTY PAID DECLINED A FURTHER 51 PER CENT ON THE SAME PERIOD IN THE PREVIOUS YEAR.
FOR BRANDY THE FIGURES ARE DECREASES OF 27 PER CENT AND 70 PER CENT RESPECTIVELY.
+ IN NEITHER CASE IS A DROP IN CONSUMPTION THE FULL ANSWER. THE SITUATION IS DETERIORATING RAPIDLY. THE TRADE IS FULLY AWARE OF THESE FACTS WHICH HAVE BEEN WELL AIRED IN THE PRESS, MY PROPER CONCERN IS THE REVENUE LOSS IN RESPECT OF DUTY PAID ON TOBACCO AND LIQUOR IN PARTICULAR. FINANCE BRANCH ESTIMATES THAT THIS LOSS COULD BE UP TO $450 MILLION IN 1984-85, WHATEVER THE ACTUAL FIGURE, IT IS VERY LARGE INDEED AND I CANNOT ACCEPT A SITUATION WHICH IS DEPRIVING HONG KONG OF REVENUE ESTIMATED TO BE UP TO 30 PER CENT OF THE ORIGINALLY ESTIMATED YIELD FROM THESE TWO DUTIES IN 1984-85. FOR THIS REASON REJECT THE OPTION OF DOING NOTHING.+
SIR JOHN SAID A DUTY FREE CONCESSION - AN EXEMPTION PROVIDED BY MOST GOVERNMENTS -- WAS ONE OF THE ATTRACTIVE PERKS OF OVERSEAS TRAVEL. HE ACKNOWLEDGED THE BENEFITS TO HONG KONG WHEN TOURISTS BOUGHT GOODS HERE TO TAKE BACK TO THEIR HOME COUNTRIES AND ENJOY DUTY FREE CONCESSIONS THEREBY.
+1 DO NOT WANT TO UPSET INCOMING TOURISTS. THE ARGUMENT HAS SWINGS AND ROUNDABOUTS, THUS I HAVE DISMISSED THE OPTION THAT THE COMMISSIONER OF CUSTOMS AND EXCISE SHOULD REMOVE THE CONCESSION ALTOGETHER.+
/SIR JOHN