EU spirits group lambaste Hong Kong duty cuts
government's decision to omit liquor from a recently announced
exemption of duties on imported alcohol products.
Jamie Fortescue, director general of the European spirits organisation (CEPS), told BeverageDaily.com that the industry regretted the decision of the country's financial secretary to remove duties only on imports of wine and beers entering the country. Asia is becoming an increasingly significant market for European alcohol producers, particularly for goods like Scotch whisky, though the current high level of tax for products in the region has caused some concern for manufacturers. Fortescue claimed that although the Hong Kong government's decision to not include sprits in the exemption was "fairly unique", it generally reflected a culture of high taxation for the products in the wider Asian market. "In taking another similar emerging market like Latin America by comparison, Asia generally has much higher taxation rates for spirits, particularly in the larger markets," he stated. The duty cuts, which have come into immediate effect, were announced this week during the maiden budget speech of financial secretary John Tsang. The cuts are part of a plan to create a wine trading and distribution centre in the country, according to press sources. Dropping the duty on wine and beer is expected to cost the government about HK$560m (€47m) a year, according to official figures mentioned in the speech. However, the CEPS added that it saw no reason for the government to exclude spirits from the focus and would look to therefore resume lobbying in the country over the matter. Asian campaigning Despite the CEPS' complaints, the spirits industry has enjoyed relative success in recent times through campaigning to reduce the level of customs charges for their products in Asia. Just last month, the EU said it would open talks with the World Trade Organisation (WTO) over its concerns regarding Thailand's custom charges. The CEPS alleges that sales of their products in the Thai market have been restricted since September 2006, after customs authorities in the country began rejecting tariff values set by the country's importers. The authorities are accused of replacing these values with their own higher estimates. Such an approach to assigning custom charges, which establish tax and duty value on imported products, is in breach of the WTO Customs Valuation Agreement, according to the CEPS. Another recent victory change came in July, when India's Central Board of Excise and Customs (CEBC) agreed to withdraw additional duties on foreign alcohol products. The cost of imported wines and spirits in India are expected to drop significantly as a result of the decision.
