TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 206

4.2.87

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113.

All the duty proposals on imported tobacco come

into effect this afternoon and should generate a total

additional revenue yield of $55 million in 1987-88.

114.

In 1985, my predecessor mentioned the option of

imposing an ad valorem duty on tobacco (41). The trade

was subsequently consulted and their response was far from

unanimous (42). The existing duty structure with its

consequent payment and drawback requirements is, however,

less than ideal, particularly in relation to cigarettes.

It is cumbersome and costly to administer. It also

imposes costs on local manufacturers, who have to tie up

working capital in pre-paid duty that can only be

reclaimed on the export of finished products. The

differential in duty rates for imported and locally

manufactured products is open to charges of protectionism

although the present differential of around 10% is fully

within our rights and obligations under the General

Agreement on Tariffs and Trade.

(41)

(42)

1985 Budget Speech, paragraph 118.

1986 Budget Speech, paragraph 102.

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