In an effort to revive its status as a premier travel destination with a vibrant nightlife and dining scene, Hong Kong's Chief Executive, John Lee, announced a significant reduction in liquor tax on Wednesday. The move comes as part of a broader strategy to enhance the city’s economic competitiveness amid challenges from regional rivals like Singapore, Japan, and mainland Chinese cities.
Lee revealed in his annual policy address that the duty rate for spirits with an import price exceeding 200 Hong Kong dollars (approximately $26) would be slashed from 100% to 10% for the portion above that price. The tax cut, effective immediately, is intended to support the logistics, storage, tourism, and high-end dining industries in the city.
Hong Kong's economy has faced growing pressure due to shifts in residents' lifestyles and the departure of many middle-class citizens during the COVID-19 pandemic. These changes, coupled with an increasing preference among residents to spend weekends in mainland China—where lower prices and more varied entertainment options are available—have contributed to declining local demand. Additionally, spending by mainland Chinese visitors has dropped significantly.
Vacancies are now a common sight in the city's once-thriving shopping districts, and the city’s bar revenue fell by about 28% in the first half of 2024 compared to the same period in 2019, according to preliminary official data.
With this tax reduction, Lee hopes to reinvigorate Hong Kong’s economy, particularly its nightlife and hospitality sectors, and attract both locals and international visitors back to the city’s high-end dining and entertainment establishments
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