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Following is a question by the Hon Vincent Fang and a written reply by the Secretary for Financial Services and the Treasury, Professor K C Chan, in the Legislative Council today (July 4):
Question:
Regarding the smuggling and sale of duty-not-paid cigarettes (commonly known as illicit cigarettes), will the Government inform this Council:
(a) whether it knows the quantity of cigarettes consumed in Hong Kong last year and, among them, the respective quantities of duty-paid cigarettes and illicit cigarettes;
(b) of the places of origin, sales channels and targets, as well as the smuggling channels and trend of the illicit cigarettes seized by the Customs and Excise (C&E) Department in the past three years; and the latest strategy adopted by the C&E Department to combat illicit cigarettes; and
(c) of the estimated amount of duty the Government loses each year because of illicit cigarettes and whether, at this stage, it has any plans to revise tobacco duty to combat the problem of illicit cigarettes?
Reply:
Madam President,
(a) We do not have the yearly statistics of cigarette consumption in Hong Kong. In the past three years, the quantity of illicit cigarettes seized each year was approximately equivalent to 1.4% to 3.5% of the quantity of duty-paid and duty-free cigarettes.
(b) The illicit cigarettes seized by the Customs and Excise Department (C&ED) were mainly from the Mainland. The C&ED's strong enforcement has reduced cigarettes smuggling significantly in recent years. In most cases, smugglers now resort to shifting the storage of illicit cigarettes to Mainland, and smuggle them to distribution points in Hong Kong on demand. At the peddling level, on-street selling of illicit cigarettes has basically been eliminated, and has now been reduced to furtive peddling to known customers.
The C&ED's main strategies to combat illicit cigarettes include enhancement of intelligence gathering and closer cooperation with law enforcement agencies of other jurisdictions. C&ED will also continue its rapid and intensive raids on peddling black spots, and strengthen prosecution against sellers and buyers of illicit cigarettes.
(c) The duty potential of the illicit cigarettes seized in the past three years has dropped from $147.8 million in 2004 to $63.3 million last year. In formulating the annual Budget, the Government would review various revenue items, including the duty on tobacco.
Ends/Wednesday, July 4, 2007
Issued at HKT 15:40
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