Gov’t rules out delaying or phasing in air tax hike

The government will raise the airport departure tax from HK$120 to HK$200 as scheduled, the Financial Services and the Treasury Bureau said on Wednesday, despite lawmakers’ concerns over its impact on Hong Kong’s aviation competitiveness.

In a written response to the Legislative Council on Wednesday, the bureau insisted that the hike of HK$80 is reasonable, because the tax was last increased 22 years ago and its level is close to the cumulative inflation rate of about 64 percent during the period.

It argued that the tax hike would have little impact on tourists and Hongkongers, accounting for around 1 percent of overseas visitors’ per capita spending and a small portion of travel costs for Hongkongers, including low-cost carrier passengers.

The bureau highlighted that the airport construction fee, introduced in 2016 to fund the three-runway system, had a limited negative impact on passenger throughput at the city’s airport.

Despite the additional charge, passenger numbers grew steadily in 2017 and 2018, the bureau noted, adding that the decrease in passenger traffic between 2019 and 2022 is attributed not to the fee but to external factors such as social unrest and the pandemic.

Treasury officials believe the strong connectivity of the city’s airport, with links to around 90 international destinations, makes it a standout choice for travelers and that the proposed air tax increase is unlikely to prompt them to choose other airports.

“In response to the views that the increase in (Air Passenger Departure Tax) is too high and lacks supporting data, we must emphasise that the government has struck a balance between increasing revenue and minimising the impact on passengers,” the letter read.

“We consider the current rate of increase reasonable and therefore have no intention to adjust it, nor will we increase (Air Passenger Departure Tax) in phases or defer the increase.”

The government mentioned its plans to exempt passengers departing within 48 hours from the airport departure tax, offering what it called a more “generous” policy than the 24-hour exemptions in neighboring regions like Singapore, Tokyo, and Seoul.

The exemption will be included in the relevant subsidiary legislation and submitted to the Legislative Council within two to three months, authorities added, aiming for implementation by October 1.
(Jamie Liu)