One of world’s highest alcohol duties slashed in effort to revive nightlife

Hong Kong ‘promotes liquor trade’ as post-pandemic tourism lags behind

Hong Kong has cut one of the world’s highest alcohol taxes in an effort to coax tourists back to the island and revive nightlife.
John Lee, the chief executive of Hong Kong, said on Wednesday that spirits duty would be slashed to 10pc and apply only to the portion of the price surpassing HK$200 (£20). 
Until now, drinks with an alcoholic percentage of 30pc or more, such as vodka, gin and whisky, had been taxed at 100pc, one of the world’s highest rates.
Hong Kong’s leader said he’d taken the unusual measure to “promote liquor trade” as part of a broader drive to “explore new growth areas”.  
The regional government is also launching a “study in Hong Kong” scheme to attract more overseas students to Hong Kong.
Mr Lee said in his annual policy address: “We must maintain our development momentum and self-renewal, and that we must embrace changes while staying principled, innovative and flexible in meeting challenges and opportunities.”
Hong Kong tourism has not recovered post-pandemic, despite a global boom in international travel. In the first four months of the year, tourism reached only 60pc of pre-pandemic levels. 
The region has spent around $130m (£100m) this year on bringing in influencers, giving away flights and even telling service workers to smile more in an effort to attract foreigners. However, the measures have failed to make much of a dent so far, with many small businesses forced to close. 
The Straits Times, a Singaporean English-language newspaper, said of Hong Kong earlier this year: “Many bars and nightclubs that stayed open overnight before the pandemic are now closing at about 2am due to a lack of customers, and the number of vacant premises in the popular Lan Kwai Fong area is increasing.”
Insomnia, a live music venue and nightclub venue in the area, closed last summer after 25 years in business.
As well as tourists, Hong Kong is also struggling to attract and retain foreign residents and companies who have been exiting amid China’s tightening control. Beijing imposed a national security law on the region in 2020 that has been heavily criticised around the world and blamed for curbing democracy and free speech.
The territory has also suffered a blow from China’s economic slowdown, with fewer visitors from the mainland.
The bet on booze comes after Hong Kong successfully ditched wine duties in 2008 and established itself as an Asian wine trading hub. 
The policy may also stem the flow of local residents travelling across the northern border to the Chinese city Shenzhen for dining out. 
The attempt to encourage drinking comes as younger generations in rich countries increasingly turn their back on alcohol in favour of healthier lifestyles and amid squeezed finances. 
In other measures to try to push growth, the government will also loosen mortgage rules to support the struggling real estate sector. 
Hong Kong’s 100pc alcohol tax was one of the highest in the world. Research from Oxford Economics showed that Laos is one of the few countries with an even higher tax on spirits of 110pc. In mainland China, the rate is between 15 and 25pc. 
Separate figures from the World Health Organisation show that taxes account for 89pc of the cost of a typical bottle of spirits in Norway, while in the UK it is typically 64pc.