Hong Kong cuts liquor taxes to revive nightlife

HONG KONG (AP) — Hong Kong’s leader announced a cut in liquor taxes Wednesday as the Asian financial center hopes to revive its reputation as a travel destination with vibrant nightlife and restaurants.

After fulfilling Beijing’s long-standing obligation to take action a homegrown national security lawChief Executive John Lee now faces economic competitiveness challenges against regional rivals such as Singapore, Japan and mainland Chinese metropolises.

Changes in the lifestyle of residents and a wave of middle class emigration during the COVID-19 pandemic have dampened local demand. Many residents now prefer to spend their weekends in mainland China, attracted by the lower prices and greater variety of entertainment options. Visitors from the mainland also spend less in the city than before.

Vacant stores are common on the city’s most popular shopping streets, and sales at the city’s bars fell by around 28% in the first half of 2024 compared to the same period in 2019, preliminary official data shows.

In his annual policy speech, Lee said the excise tax rate on liquor with an import price of more than 200 Hong Kong dollars (about $26) will be reduced from 100% to 10% for the portion above that price from Wednesday. He said he hoped it would boost logistics, warehousing, tourism and luxury restaurants.

The government previously told lawmakers that after wine taxes were abolished in 2008, imports increased by 80% in a year and the city welcomed hundreds of new wine-related businesses.

Lee highlighted the city’s various global rankings at the end of his speech at the legislature, but said past performance does not guarantee future success.

“We must continue to have confidence in ourselves and uphold our morale, and stand firm against any attempt to downplay our success story,” he said.

Lee, a former security chief handpicked by Beijing to lead Hong Kong, the new security law was pushed through in March. Critics fear the law will further restrict civil liberties promised to the former British colony when it returned to Chinese rule in 1997.

That law follows comparable national legislation Beijing imposed orders to suppress massive anti-government protests in 2020. Since that law came into effect, many of the city’s leading activists have been prosecuted, forced into self-exile or silenced. The Hong Kong government said the security laws are necessary for the city’s stability.

But in the wake of these dramatic political changes, many middle-class families and young professionals have emigrated to Britain, Canada, Taiwan and the United States.

To attract more wealthy migrants, Lee has overhauled a scheme that grants residency to applicants who invest at least 30 million Hong Kong dollars ($3.9 million) in certain types of assets. From Wednesday, home purchases worth 50 million Hong Kong dollars ($6.4 million) or more can count towards up to one-third of the requirement, he said.

Lee also pledged to make the city an international hub for post-secondary education by offering scholarships to foreign students, and pledged to take steps to develop the “silver economy” and the “low-level economy,” Beijing’s buzzwords for markets such as elderly care, private aviation and drones. He also announced plans to build an international gold trading market and create a new commodity trading ecosystem.

Lee also proposed regulating the city’s subdivided flats, which a top Hong Kong affairs official has called for to be abolished.

About 110,000 households live in such homes, which are notorious for their small size and poor living conditions but provide a relatively affordable housing option in one of the most expensive housing markets in the world.

Lee said owners of subsidized apartments must ensure that each house has windows, an individual toilet and a minimum floor area of ​​8 square meters (86 square feet) after a grace period.

Lo Kin-hei, chairman of the Democratic Party, one of the few remaining pro-democracy parties in the city, expressed concern about the impact of the new rules, saying it could force people living in larger but windowless houses to move to smaller flats with windows. .

“Can the standards translate directly into improvements in the lives of the residents who live there? We have questions,” he said.

Hours before Lee’s speech, a small group of activists from the League of Social Democrats, another pro-democracy party, held a small demonstration outside government headquarters. They called for universal suffrage for elections for top executives and for a pension scheme.

“Return to democracy, improve people’s livelihoods,” they chanted.