Report Major Deliberations of the Bills Committee as Chairman of the Bills Committee on Dutiable Commodities (Amendment) Bill 2009

MR CHAN KIN-POR (in Cantonese): President, in my capacity as Chairman of the Bills Committee on Dutiable Commodities (Amendment) Bill 2009 (the Bills Committee), I report to this Council the major deliberations of the Bills Committee.

The Bills Committee has held two meetings and received views from the public. The Dutiable Commodities (Amendment) Bill 2009 (the Bill) seeks to amend the Dutiable Commodities Ordinance (Cap. 109) so as to implement the proposal of increasing the duty rate on tobacco by 50%. The objective is to strengthen tobacco control efforts to protect public health.

Members of the Bills Committee generally support the policy objective and proposal of the Bill. However, some members have expressed doubt about the effect of the increase in tobacco duty on smoking prevalence as they consider that the increase will only prompt smokers to switch to consuming illicit cigarettes, thus stimulating the smuggling activities of illicit cigarettes. Moreover, many illicit cigarettes are counterfeit cigarettes which pose even more serious harm to health.

Members opine that there are incentives for smuggling activities to increase if the sale price of illicit cigarettes has risen significantly. Hence, the BillsCommittee has requested the Administration to crack down on illicit cigarette activities on a comprehensive scale. In this connection, the Administration has made an undertaking to continue to devote sufficient resources, and enhance enforcement intelligence gathering efforts in order to crack down on illicit cigarette activities on all fronts. Regarding the effectiveness of the tobacco duty increase in reducing smoking prevalence, the Administration pointed out that since the announcement of tobacco duty increase by the Financial Secretary, the number of enquiries received by the Smoking Counselling and Cessation Programme has increased significantly. However, some members hold that the increase in the number of calls is insignificant compared to the smoking population of 600 000 in Hong Kong. The tobacco duty increase has seriously affected the livelihood of cigarette retailers, particularly the newspaper hawkers, in Hong Kong. These members criticized the Administration for failing to conduct an assessment on the social and economic impacts of the increase in tobacco duty before its introduction. They considered that the tobacco duty rate increase would only lead to an upsurge in the sale of duty-free cigarettes, which would reduce tax revenue to the Government. But in reply, the Administration provided the statistics on the monthly average sales of duty-free cigarettes for the two months both before and after the tobacco duty increase as well as the statistics for the same period last year, showing that there has been no significant increase in the average monthly sales of duty-free cigarettes.

Members have expressed grave concern about the impact of the tobacco duty rate increase on the livelihood of newspaper hawkers. The Administration has advised that it is in active discussion with the trade to explore possible ways to improve their business environment, such as permitting sale of additional commodities other than those specified in the relevant licence and enlarging the proportion of stall area designated for selling additional commodities, provided that no adverse impact will thus be posed to environmental hygiene. The Administration has indicated that it is also prepared to consider the trade’s suggestion on advertising at the stalls. It has also confirmed that the Food and Environmental Hygiene Department will continue to maintain dialogue with the hawker representatives and will actively consider their proposals.

The Bills Committee has also expressed concern about the adequacy of the allocation of resources for smoking cessation and whether the additional revenue from tobacco duty will be used for setting up a dedicated fund for smokingcessation services. While the Administration has made no undertaking to this effect, it pointed out that more financial resources has been devoted every year to tobacco control in recent years. The provision for publicity and education programme on smoking prevention and cessation for 2009-2010 will be $33.7 million. The Bills Committee has requested the Administration to provide a progress report to the relevant panels within six months to one year after the enactment of the Bill in relation to the effectiveness of the Administration’s efforts in combating illicit cigarette activities, the sale figures of duty-free cigarettes, the statistics on changes in the number of smokers in Hong Kong as well as the measures taken to increase the business opportunities of newspaper hawkers.

The Bills Committee supports the Bill and both the Administration and members have not proposed any Committee stage amendments.

I so submit. Thank you, Deputy President.

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