HONG KONG — On Wednesday, the Chief Executive of Hong Kong announced a significant reduction in the liquor tax, aiming to revitalize the city’s status as a lively destination known for its nightlife and culinary offerings.
After successfully implementing a long-awaited national security law mandated by Beijing, Chief Executive John Lee is now confronting the challenge of maintaining the city’s economic competitiveness in light of fierce competition from regional hubs such as Singapore, Japan, and other mainland Chinese cities.
Shifts in the lifestyle preferences of residents and a notable exodus of the middle class during the COVID-19 pandemic have led to a decline in local patronage. Many residents now opt to spend their weekends in mainland China, drawn by lower costs and more diverse entertainment choices. Additionally, visitors from the mainland have been observed to spend less in Hong Kong compared to previous years.
The impact of this trend is visible, with numerous vacant storefronts in Hong Kong’s busiest shopping areas. Preliminary data indicates that bar revenues in the city fell by approximately 28% in the first half of 2024 when compared to the same timeframe in 2019.
In his annual policy address, Lee unveiled plans to significantly lower the import duty on liquor priced over 200 Hong Kong dollars (around $26), reducing the tax rate from 100% to 10% for the amount exceeding that price. He expressed hopes that this move would support various sectors, including logistics, storage, tourism, and fine dining.
Previously, the government had informed lawmakers that abolishing wine duties back in 2008 led to an 80% surge in imports within just one year, also resulting in the establishment of numerous wine-related businesses in the city.
Lee, a former security chief selected by Beijing to lead the city, brought the national security law into effect in March. Detractors of this law warn that it could further infringe upon the civil liberties that were promised to Hong Kong upon its return to Chinese sovereignty in 1997.
This legislation mirrors the broader national laws enacted by Beijing in 2020, which were aimed at suppressing large-scale anti-government protests. Following the implementation of this law, many prominent activists in Hong Kong have faced prosecution, gone into self-imposed exile, or been rendered silent. The Hong Kong administration maintains that the security measures are essential for the city’s stability.
As a consequence of these major political shifts, a significant number of middle-class families and young professionals have relocated to countries such as the United Kingdom, Canada, Taiwan, and the United States.
To entice affluent migrants, Lee has also modified a residency program that grants residency to individuals who invest at least 30 million Hong Kong dollars (roughly $3.9 million) in select assets. Effective Wednesday, home purchases valued at 50 million Hong Kong dollars ($6.4 million) or higher can count for up to a third of the investment criterion.
Shortly before Lee’s announcement, a small group of activists from the League of Social Democrats, among the few remaining pro-democracy factions, staged a modest protest outside the government headquarters. They advocated for universal suffrage concerning chief executive elections and for the implementation of a retirement pension plan.
“Return to democracy, improve people’s livelihood,” they chanted, reflecting the ongoing demand for political reform and social equity among segments of the population.