As the 2021-22 Budget is soon to be delivered, as usual, different political parties, think tanks and policy advocacy groups are making all sorts of attempts to offer advice to society. There may be no shortage of creative ideas, but more often than not, it is the same old story, year after year. The Hong Kong Council On Smoking and Health (COSH) is one such example. This year, they continue to call for “a 100% increase in tobacco tax plus a year-on-year increase,” hoping to generate additional revenue for the government while reducing the smoking population. Nevertheless, this type of thoughtless and subjective desire is quite far from the actual circumstances of the world, which is ridiculous to the extreme.
Rationalization has always been the key to policymaking. In his analysis of the characteristics of rationalization, Max Weber, recognized as one of the fathers of sociology, coined the categories of “instrumental rationality” and “value rationality.” “Instrumental rationality” pursues the greatest effectiveness in achieving goals, and the preferred means to realize such results are always based on maximizing benefits. On the contrary, “value rationality” involves the pursuit of morality, ethics, and values. The means used may not be able to maximize the benefits, but they will still be used because of the conscious belief in the “values” behind them.
Considering the COSH’s proposal from the “instrumental rationality” level, based on smokers’ inherent reliance on tobacco, an increase in tobacco tax could theoretically increase the coffers’ revenue. However, according to the data published by the Customs and Excise Department, they have seized nearly 200 million sticks of illicit cigarettes last year, the highest number in 20 years, surpassing the total number of illicit cigarettes seized in the past three years, involving duties of up to HK$364 million (US$47 million). The number is so high that people are shocked to hear it, but the reason behind it is quite simple: people who cannot afford expensive cigarettes will simply be forced to switch to the illicit cigarette trade. In other words, the increase in tobacco tax will not help smokers quit smoking, but will only exacerbate the problem of illicit cigarette activities. It will not only bring further pressure to the law enforcement department, forcing Customs to deal with the policy mistakes of the policy bureau, but will also fail to increase the government coffers through the raise of tobacco tax.
From a “value rationality” point of view, the COSH may have mistakenly thought that the high price of cigarettes could help “scare” smokers into quitting the bad habit for financial reasons and move on to a healthy lifestyle, which may sound desirable. Only, numbers do not lie. The government hiked up tobacco tax on three occasions in 2009, 2011 and 2014. According to the government’s statistics in 2019, the number of smokers fell by less than 1% after the three tax spikes (11.2% in 2010 and 10.5% in 2019). The reality is that some of these smokers chose to take the risk of smoking illicit cigarettes from unknown sources and of varying quality, and their health was at stake. All of these things are unbeknownst to the COSH members who sit in the air-conditioned room and point their fingers, giving instructions.
The government always asks the public to view the administration “rationally” and to actively offer their opinions. However, the tobacco tax increase does not conform to the principle of rationality no matter in terms of “instrumental” or “value.” Is the COSH’s proposal to do the opposite for the benefit of self-complacency, or to tempt relevant departments to ignore the needs of the public and become enemies of the people?
In the face of a serious fiscal deficit, instead of listening to the council’s unrealistic recommendations, the Financial Secretary and Administrative Officers would be better off considering countermeasures to patch up the tax loopholes. As a matter of fact, many smokers in Hong Kong have switched to smoking heated tobacco products (HTPs). If the future Legislative Council can concentrate its efforts on regulating the taxation of HTPs, it can effectively combat the current smuggling of HTPs and legitimately return the revenue to the coffers, which is simple and direct, and is believed to be a hundred times more effective than “a 100% increase in tobacco tax.”
(Koo Shu-wai, independent writer)
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