SECRET&#*2
Statement
Duty structure for tobacco
FINANCIAL SECRETARY:
Sir,
l.c
that
1987 In my
Budget Speech, mentioned lic
I
the Administration
would review
the
structure
of our present duties on tobacco. This review is
now
complete.
7.
duty Our existing
key characteristics.
on a weight basis.
three
First, the duty payable is levied Second, there is a differential
structure has
in duty rates between imported cigarettes and locally manufactured cigarettes. Third, the present system requires the pre-payment and subsequent reimbursement of `duty in respect of locally manufactured tobacco products that are exported from Hong Kong.
7.
Our
number of
review has identified a problems arising from these characteristics.
First,
the duty differential in favour of locally manufactured
is vulnerable to cigarettes
criticism by exporting countries, even though the present differential
per cent 10% is within
within our rights and obligations under General Agreement on Tariffs and Trade.
K.
Second,
cumbersome to
the
of
the
drawback duty Cigarette manufacturers operate. duty on the import of
of raw materials used in cigarette production. Later, when they export finished products, drawback according to the manufacturers can
claim
system
is
pay
Ye
net weight of tobacco contained in the cigarettes exported. To
To assess the weight of tobacco exported,
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