Increase in Hong Kong airport departure tax could hurt city's competitiveness, lawmaker says
An increase in Hong Kong's airport departure tax could hurt the city's competitiveness, a lawmaker has said, after the government doubled down on plans to increase the levy from HK$120 to HK$200 despite criticism.
Lawmaker Lo Wai-kwok said on a Commercial Radio programme on Thursday that amid competition from other destinations such as the Greater Bay Area, Singapore and Thailand, a tax hike could deter short-haul travellers.
'We must consider how this affects our position against neighbouring hubs,' Lo said in Cantonese.
His comments came after the Financial Services and the Treasury Bureau defended the tax increase in a letter to Legislative Council members on Wednesday, saying the impact of the hike would be 'minimal.'
The bureau said that taking into account the per capita spending of tourists – except those from mainland China – and excluding the cost of air tickets, the proposed increase of HK$80 accounts for around 1 per cent of the overall travelling cost.
'The proposed increase of [the airport departure tax] should not provide a strong incentive for travellers to switch to other airports for travelling,' the bureau wrote.
Lawmaker Perry Yiu, who represents the tourism sector, said in a Facebook post on Wednesday that he was 'disappointed' by the authorities' response.
'While [I] understand that the SAR government is doing its best to increase its reserves and address the deficit, the letter did not respond to my and the sector's concerns,' he wrote.
He added that the airport's traffic had only recovered to 74 per cent compared with 2019 levels, while neighbouring aviation hubs' recovery rates were at least 90 per cent.
Deepening deficit
Financial Secretary Paul Chan first announced the plan to increase the airport departure tax during the budget address in February as one of several measures to boost the city's reserves amid a deepening deficit.
The hike – planned to come into effect on October 1 – would bring an estimated HK$1.6 billion in revenue annually, Chan said.
Hong Kong logged an estimated HK$87.2 billion deficit in the 2024/25 financial year, a result attributed to a drop in land sales.
In the Wednesday letter, the government said it had been in contact with the Airport Authority and major airlines to gather their views on the proposed increase.
'We consider the current rate of increase reasonable and therefore have no intention to adjust it, nor will we increase [airport departure tax] in phases or defer the increase,' the government wrote.
It added that, compared with other measures to increase government revenue, such as salaries and profits tax, raising the airport departure tax would only affect air passengers.
Hong Kong's status as an aviation hub took a major hit during the Covid-19 pandemic, when strict testing rules and mandatory quarantine periods in place for over three years led airlines to cut their routes to and from the city.
Airport traffic figures have struggled to recover since. In 2024, the city saw 53.1 million passengers, down from 71.5 million in 2019.
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