WEDNESDAY, MAY 15, 1991
"THUS,
WE KNOW THAT A SHARP INCREASE IN DUTY CAN WORK IN IONG KONG, GIVEN THE CHANCE," HE SAID.
IN THE CIRCUMSTANCES, THE FINANCIAL SECRETARY SAID HE REMAINED OF THE VIEW THAT THE ORIGINAL MEASURE CONCEIVED ON HEALTH GROUNDS WAS CORRECT.
OWN
"INDEED, THE POLICIES OF THE WORLD HEALTH ORGANISATION, AND OUR EXPERIENCE IN 1983, HAVE ADDED WEIGHT TO THIS VIEW, I MIGHT ADD THAT NO OTHER MEASURES THAT I HAVE INTRODUCED IN ANY OF MY PREVIOUS BUDGETS HAVE RECEIVED AS MUCH WORLDWIDE SUPPORT AS THE 200 PER CENT INCREASE IN DUTY ON TOBACCO PRODUCTS.
"HONG KONG HAS BEEN CONGRATULATED FOR ITS COURAGE AND RESOLVE TAKING THIS MEASURE BY NUMEROUS INTERNATIONAL HEALTH ORGANISATIONS,
IN
"
HE SAID.
MANY
"ON THE OTHER HAND, IT IS THE OTHER PART OF THE DILEMMA, HARDLY SURPRISINGLY, THE MEASURE HAS PROVOKED CONSIDERABLE OPPOSITION FROM CERTAIN SECTORS OF THE COMMUNITY, AND THIS REACTION, HAS CAUSED MEMBERS OF THIS COUNCIL, AND INDEED THE PUBLIC GENERALLY, CONCERN. THE THRUST OF THIS CONCERN CENTRES AROUND THE EFFECT MEASURE IS PREDICTED TO HAVE ON THE CONSUMER PRICE INDEX," HE SAID.
DEEP
THE
HE POINTED OUT THAT THERE WAS NO DOUBT THAT AN IMMEDIATE DECREASE IN THE DUTY RATES ON TOBACCO PRODUCTS WOULD HAVE A BENEFICIAL EFFECT ON THE CPI(A) IN THE SHORT TERM, ALTHOUGH THERE MIGHT BE OTHER FACTORS THAT COULD DISGUISE THIS EFFECT.
"IN THE LONGER TERM, THE IMPACT ON INFLATION IS NOT AS
STRAIGHTFORWARD.
++ THE BASKET OF ITEMS MAKING UP THE CPI(A) AND THEIR RELATIVE WEIGHTINGS ARE FIXED. THE INDEX, THEREFORE, NOT ONLY FAILS TO REFLECT THE PREDICTED REDUCTION IN DEMAND FOR TOBACCO PRODUCTS, BUT ALSO OVER- STATES THE INFLATIONARY IMPACT OF THE DUTY INCREASE, HE EXPLAINED.
**
MOREOVER, SIR PIERS SAID THE WHOLE POINT OF INCREASE HAD BEEN OVERLOOKED; IT SOUGHT TO MAKE EXPENSIVE, SO THAT PEOPLE YOUNG PEOPLE IN PARTICULAR SMOKING.
THE ORIGINAL TOBACCO MORE WOULD GIVE UP
"THE RESULT IS THAT, AS TOBACCO BECOMES A LESS AND LESS IGNIFICANT ELEMENT IN THE CPI SHOPPING BASKET, THE WEIGHTING IN THE INDEX WILL NATURALLY FALL, AND THE TRANSITORY INFLATIONARY EFFECT FOR THE SMALL PERCENTAGE OF THE SMOKING POPULATION WILL DISAPPEAR,' HE SAID.
WHEN
11
THE FINANCIAL SECRETARY WAS OF THE VIEW WHAT MIGHT WELL HAPPEN THE INCREASE WAS HALVED TO 100 PER CENT WAS THAT THE EFFECT ON THE CPI, ALTHOUGH SMALLER IN PERCENTAGE TERMS, WOULD BE MORE ENTRENCHED BECAUSE A SMALLER NUMBER OF PEOPLE WOULD GIVE UP SMOKING.
"IN
THE LONGER TERM, IF THE INCREASE IN DUTY IS HALVED TO 100 R CENT, IT IS POSSIBLE THAT LESS PEOPLE WILL GIVE UP SMOKING THAN 'GHT OTHERWISE HAVE BEEN THE CASE, AND THE WEIGHTINGS IN THE CPI(A) AY, THEREFORE, NOT BE REVISED AS SWIFTLY," HE SAID.
/NOTING THAT
T