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  • Dec 22, 2014
  • Updated: 8:25pm

Parallel trading

The influx of parallel traders who buy their stock tax-free in Hong Kong to resell it in mainland China at a profit is causing growing unrest. Residents of Sheung Shui, a town close to China's border, say the increase in parallel importers has pushed up retail prices and causes a general nuisance. Importers argue that their trade benefits the Hong Kong economy.

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POLITICS

Democratic groups propose arrival tax of up to HK$100 to curb mainland visitors

Suggestion by democratic groups to charge visitors up to HK$100 is rejected by the tourism trade and labelled ‘brutal’ by one lawmaker

PUBLISHED : Tuesday, 11 February, 2014, 4:33am
UPDATED : Tuesday, 11 February, 2014, 10:12am
 

Two democratic groups have proposed slapping an arrival tax of HK$20 to HK$100 on non-Hong Kong residents who enter the city by land as a means of curbing the influx of mainland visitors.

But the idea drew a hostile reaction from the tourist industry, which said it would damage the city's image, and a Beijing-friendly lawmaker who said it was a rather a "brutal" solution.

The biggest tax, HK$100, was suggested by radical group People Power. The Democratic Party proposed HK$20 to HK$50.

Concern about Hong Kong's ability to absorb mainland tourists has risen since commerce chief Greg So Kam-leung estimated last month that tourist numbers could climb 30 per cent to 70 million a year in three years, and to 100 million in a decade.

Watch: Can residential areas in New Territories handle mainland tourists?

"We are not trying to drive all tourists away, but to control - or stabilise - the numbers of tourists," Democratic Party lawmaker Sin Chung-kai said. "Hopefully the proposed tax would discourage mainland tourists - particularly parallel-goods traders - from travelling to Hong Kong."

The party said about 20 million or 88 per cent of the 23.1 million independent travellers in 2012 entered the city by land.

People Power lawmaker Albert Chan Wai-yip said his party's more aggressive plan might stem the influx of at least 10 million mainland travellers a year who enter and leave on the same day.

When asked about Chan's proposal, Secretary for Security Lai Tung-kwok said he would not comment on it but stressed his bureau was taking steps to ease the traffic load at borders. Future plans included more checkpoints and promoting the use of automated passenger clearance.

Watch: Can Hong Kong's border checkpoints handle more tourists?

Travel Industry Council executive director Joseph Tung Yao-chung said a charge would undermine Hong Kong's image.

"I haven't heard of any places in the world that charge an arrival tax," he said, adding that the government should figure out ways to cope with the flood of tourists instead of imposing a new tax.

Ocean Park chairman Allan Zeman said: "I'm worried that this would make visitors feel unwelcome. They can go to many places in Asia and do not have to come to Hong Kong."

Federation of Trades Unions lawmaker Wong Kwok-kin said an arrival tax was a "brutal" way of dealing with the problem.

"It gives people an impression that the measure is targeting a specific group of people - mainlanders - and it is discriminative."

In 2003 the then financial secretary, Antony Leung Kam-chung, proposed a land departure tax of HK$18, but it was scrapped in the face of widespread political opposition.

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don67
Ok, the tax may this time have been suggested by a radical political party, but I think the proposal in itself has merit and deserves at least some thought. At the moment, all travellers using our airport must pay a few hundred dollars in airport taxes. If all cross-border travellers are charged a small tax, I don't see how it would be discriminatory. True, it may discourage some travellers but that is probably a good thing given Hong Kong's current state of affairs. A tax of say $50, is unlikely to discourage a genuine tourist who plans to stay for a day or two. It probably will, however, discourage some parallel good traders from making multiple trips everyday and clogging our streets and MTR. At the end of the day, Hong Kong cannot (and should not never aim to) impose a border tax high enough to discourage all mainland tourists. The tourism/retail industries will always vigorously object to any such tax, this is to be expected when vested interests are involved. But such a tax may really decrease the number of tourists in Hong Kong and would be a much more politically acceptable way of doing so than imposing a "hard limit" as others have suggested. Besides, isn't it time that Hong Kong as a whole benefits at least a little bit (through the tax) as opposed to only our bosses and landlords?
horacejeffry
Everybody using our airport pays airport tax so why not a land tax. This not just for tourists but for HK residents as well as they make up the biggest group of smugglers. Make it a HK$ 500 fee instead and all HK grannie's who que up at special/APEC lanes to buy veggie in China will also not go anymore and mainlanders who just come buy soy sauce and shampoo in HK will also stop and at the same time the kids who come daily for schools will no longer come as it becomes too expensive! Those who come to buy HK$ 60,000 watches will anyway come by plane. At same time I suggest that China customs start doing its job and checks everyone who comes from HK for luxury goods and if they have any make them pay a penalty and explain where the funds come from to buy these goods (check their tax records). HK is not just a tax haven it is a haven for criminal money and money laundering. I have never seen a bank teller ask a customer where the USD 500,000 cash or even ones over HK$ 15,000,000 cash came from when they came to deposit it. Don't try that in Europe where you have an issue carrying more then Euro 10,000 in cash
honkiepanky
This is a sound idea and should have been proposed much sooner.

There is nothing brutal or discriminatory about asking tourists to pay some small compensation for the externalities they impose upon Hong Kong residents, by overburdening public infrastructure and competing for retail space and other resources.
watertell
Are you freaking kidding me? Let's put aside how discriminating the proposal is, it would severely harm the image of Hong Kong. Is Hong Kong a tourist city or not? Is Hong Kong welcoming or not? Is Hong Kong friendly or not? If HK is to sacrifice its good reputation and qualities, it would solve the issue of overwhelming tourists soon cause NO ONE would want to visit an unfriendly town.
Besides, charging HK$100 to stop people from coming? How is it going to stop anyone? It just sends out a rude message.
Last but not least, being a colony for 100 years, Hong Kong people should at least have some empathy of being discriminated against.
John Adams
What difference does HK$100 make when one can buy a HK$60,000 Rolex watch in HK for 20% cheaper than in China ?
In fact many ( most ? ) visitors from the Mainland come here specifically to buy luxury goods and cosmetics which they take back to sell to friends.
Why else are there all the crowds in Causeway Bay ?
Has the democratic party got its head in the sand ?
aplucky1
damage hk image?
or just let the territory be overrun by 100 million , maybe be like macau, streets filled with humans unable to walk
yes, that will be a nice image for the world to see
left wing wackos like you add nothing but shrill to fixing a real problem
yellow_lynx_cat
Taiwan imposed a 4000 daily upper limit to Mainland visitors, why can' Hong Kong do it ? Hong Kong is an International city, not a shopping city for China. As a resident in Northern District I am fed up with having have to wait for another train to board to avoid those "Chi-nas". People are getting aggrevated and began acting quite rude to them (myself just saying things like ****s to them).
HK-Explorer
It would be fair if anyone over 18 entering China paid RMB$50 and anyone over 18 entering Hong Kong paid HK$50. Irrelevant of who they are (Westerners, Chinese, Hong Kong Citizens etc...).
This money could then be used to improve boarder crossing points etc..
It would not be hard to collect the money as people could use Octopus or the Shenzhen counterpart to pay.
Chinese people who enter HK 2-3 times per month and Hongers entering China 2-3 times per month would not really notice the extra cost.
This however will reduce the daily trips back and fourth.
Giwaffe
How much to charge really depends on what the purpose of the fee is. If the purpose is to discourage/reduce the number of tourists, it would seem HKD 250 to 500 would make more of an impact. If the purpose is to raise funds to improve border facilities and contribute to general revenue, then HKD 100 seems more appropriate. If the purpose is to target parallel traders, then the fee ought to be doubled or tripled for each round trip border crossing in excess of once per day.

Overall, this is a great idea to raise revenues, mitigate the strain on the local communities in Hong Kong (especially north and northwest New Territories), and reduce the load on the overloaded infrastructure.
Shadow
it does not seems ugly if we call it "Boarder maintenance and improvement fee". one could see the dirty toilets at the broader even on Hong Kong side. they are so smelly that one have to control breath before entering till coming out.
Long Queues in a cramped area. and people rushing towards Automated machines and manual counters, very common scene. WHY not expand this all to a high standard control point?
Charge $50 per head to all out bounds travelers & $50 to all inbound travelers disregard of what nationality or residence status they may have, would be best idea. We must note that even Hong Kong residents should pay the same tax too, because the aim of the tax is to improve the boarder control facilities, and not to discourage genuine travelers but those who are just lingering.
Fee should be tested for a period of 6 months and if proven good then it should be relaxed on Hong Kong residents. We must not forget that we are paying airport maintenance fee of $150 for each outbound travel.
mrgoodkat
How can that be discriminating? The tax has to be paid by all tourists not just any single group. Pretty fair if you ask me. Leaving HK via the airport already incurs a tax, so why not land borders? Hong Kong does not get anything out the huge amount of tourists, even the via fees are getting paid to China.
A better way would probably be a tax on goods, since our tourist sector always claims that every mainland visitor spends HKD 8000 on average. A 10% tax from 100 million visitors would be a nice amount of cash for our city. The government could reimburse our residents with subsidies and bigger salary tax allowances. What use is it for the average Hong Konger to live in the worlds freest economy when hosing is affordable and the visitor influx is driving prices up across the board?
ghormax
Actually, there are already tourist towns in China which charge an entrance fee. It would not be an unusual thing.
onedistrict
Idiots !!
What happens when China impose RMB 100 arrival tax on all HK residents ??
johnyuan
The most effective way to lower the number of mainland visitors who are mainly shoppers is to request officials in mainland to lower the quota. Remember there is a quota control. It is just not in the hand of Hong Kong government – some strange arrangement that needs to be clarified. When revision quota request failed, Hong Kong should set out an area adjacent to the border for holding mainland shoppers there to create such quota for visiting the rest of Hong Kong. I think has every right to do so. It is only James Tien and the likes may vehemently oppose it.
.
So CY Leung, how about thinking outside the box for our 'tourism industry'.
sipsip1238
I don't understand why people would oppose to the 100HKD tax if they want the best for HK.
Given that any visitor whether by land/air/water will now be paying a tax, the revenue can be used to help HK build better facilities, and prevent people who are just crossing to and back to smuggle products in and out of Hong Kong.
And if there are people desperate enough to pay more for HK products, why aren't we cashing in more for it, if our finance minister is so worried about the piggy bank going empty, isn't this one method to fill it up a bit more for a rainy day.
In most countries, you already have to pay a tax to enter or leave, if people are complaining why people need to pay to enter, then charge them when they leave.
I seriously question anyone with enough sincerity to actually visit our country if they aren't even willing to pay 100HKD.
nicolas
it's easy... just cancel multiple entry permit for the mainlander and it solved this argument...
22gt7
If the proposed arrival tax of HK$100 is targeted at parallel traders, it should be imposed on those who pass through the border checkpoints more than one time each day (excluding cross-border students and workers) with arrival tax doubled each time they cross the checkpoints on a daily basis. In any event, from a pragmatic point of view, the Immigration should by now have possessed a list of suspected parallel traders and should be able to impose some administrative measure to stop them if only it has the will to do so. On the other hand, the Government should not dismiss the proposal of arrival tax outright simply because the idea is floated by radical groups. Indeed, the idea should be thoroughly discussed by the public when we heard so often that Hong Kong tax basis needed be expanded.
paulgillis
All that is needed is for China to enforce its rules on charging VAT and import duties on parallel traders. But that would hurt Hong Kong sellers.
timothy.hill@hoganlovells.com
Why do you describe People Power as a democratic party - their behaviour is quite the opposite, more like that of a kindergarten bully.
Stephan
Hong Kong, Asia's Kindergarten!! This is another good example!
captam
So using your logic, Shenzhen & Dongguan authorities should likewise impose a similar tax on the Hong Kong residents who surge across the border each weekend and on public holidays to stay in their second homes, do a bit of cheap shopping or visit their secret second wives or mistresses?
ssslmcs01
I'm not sure where you got your info from but according to the Travel Industry Council`s stats the average Chinese visitor spends about 5000 HKD per visit. When you factor in the hundreds of parallel traders who focus on a few commodities like infant milk formula, they are still transporting suitcases full of it across the border every day. And of the few who are buying the Rolex watches for 60000 about half of them could not provide an eplanation as to where that money came from as their monthly salaries are about 10 K. Looking at the actual average rather than the mean, these visitors spend on average about 1200. And for many of us who have family across the border, the entire tab for their visit to Hong Kong is picked up by no other than...
Artie
As these tourist brings more $$ to HK we should first improve the facility we have here and to facilitate border crossing and then charge a small fee for the improvements .
We also need more tourist attractions ... I look upon Singapore's Marina Sands and think why doesn't HK have anything like it ... we have few mundane buildings in TST that looks like no money was spent on design ... the new passenger terminal at Kai Tak is abysmal as well.
A Hong Konger
There can be exemption for individuals who can prove they have legitimate reasons to cross the border, furthermore, like the airport departure tax, those crossing the border within 24 hour could be exempt from the proposed tax. But these obvious provisos aside, perhaps you could consider the millions of HK people who's quality of life suffers from the influx of mainlanders, rather than the handful of people like you who are interested in lining their pockets.
horacejeffry
No problem as long as they levy it also on their own people and HK also level HK$ 100 tax on HK residents All fine with me I cross the border several times a week and get sick of the ridiculous long queue's filled with grannie's either shopping for veggie at the mainland or soy sauce and shampoo in HK
Stephan
exactly....another proposal made without thinking of the consequences...
lamlm38
another option is to identify a Free Trade Zone in Shenzen where ppl can buy HK goodies duty free.. since the mainland authorities are quite keen on experimenting with this idea :)
Vittel
Restrict mainland Chinese for coming into Hong Kong, the Chinese Government have to imply and made control, imposing of entrance levy is a one way solution it will never resolve, and it just damage HK image, this is a Job for the Chief Executive to chart with the Chinese Government
chuchu59
You gotta love these guys from People Power. They may have suggested something that is discrininatory and which tarnishes HK's image but they did get people starting to talk and take sides. They are really good at being divisive. The way I see it, the more people at SCMP that are against the proposal the more support they will gain from many ordinary HK folks who feel bitter against mainlanders for a host of reasons. These PP guys ride on the sentiments of the average 'joe'.
lamlm38
well that's the 'beauty' of democracy.. if you dont say/do what the ppl want to hear, instead of what's good for the ppl, then you arent relevant anymore right?
boondeiyan
Dear xenophobes: you are the tail connected to Beijing's backside. It wags you, not the other way around. If this is news to you, please visit the Australian consulate straightaway before they start tightening up visa approvals like the Canadians. Otherwise it might be in your best interest to dispense with the 30 year-old stereotype of Ah Chaan being horrified by some token charge. There are enough affluent mainlanders to populate HK several times over; learn how to align your interests with theirs in time-honoured HK tradition.
HK-Explorer
I have had to pay airport taxes (ex Vancouver). The airport tax was to pay for improvements to the airport. Paying a cross boarder tax can go to improving facilities, making processing faster and generally improve the experience.
right now crossing the boarder is not that great an experience. Washrooms are sub standard, the general feel is not bright and happy like the HK airport is.
Mainlanders and other tourists cross the HK and China side to enter Hong Kong. These need to be made much nicer to improve the experience. (put in some art work etc..)
johnyuan
'Ocean Park chairman Allan Zeman said: "I'm worried that this would make visitors feel unwelcome. They can go to many places in Asia and do not have to come to Hong Kong."'
Money can make a sensible person insensible if not careful. What’s wrong to have a quality experience..
aplucky1
who cares what zeman says
taking his chauffeur driven rolls royce to his home on the peak, yea he really cares how this impacts normal people
zhuhaidj
What a complex place, the "one country" is. As an Aussie, I pay nothing to enter Hong Kong, feel welcomed, but have to buy a visa to enter the mainland. I've never been able to figure out the logic in that!
honkiepanky
HKers who shop in China pay VAT and various other taxes. HK has no similar tax.
HK-Explorer
I liked the ideas in SCMP about underground malls. However I thought the districts they recommended were wrong. They should be making them in easy places to build & get to.
I recommend Kai Tak. There is allot of land and building the underground malls would not impact current businesses / residents. They are going to build a new stadium at Kai Tak. The building could be partly financed by a developer who is granted the right to build a mall under it.
Kai Tak offers the ability to connect multiple underground malls and have above ground malls for access.
The Kai Tak development will have 2 new MTR stations and also a light rail system which will allow locals and tourists easy access. It also allows cruise tourists a neat place to visit.
Building underground malls in Kai Tak would have 0 cost to the government and actually bring in allot of profit. It will also enhance the CBD 2 experience as people working there would be prime users of the underground malls during the day allowing tourists to flood in on weekend (also users of the stadium would use them.
chanaa
repeg
shuike
I am a genuine traveller & crosses the borders twice daily to manage my business in Shenzhen. There are many like me. I pay taxes in both HKG & China (just incase you'd ask). Moreover, if China retaliates & imposes a Rmb100 tax on out/inbound travellers, then I have to shell out almost HK$450/daily just to cross the border. That's too high a price to do legitimate business. So these are the people most harmed by your so called suggestion. For the parrallel traders, they just add the expense onto the product. The mainlanders are rich enough to afford a few bucks extra. Have you done your maths when you wrote your comment?
keithkklau@gmail.com
It does not make good sense at all and I would say stupid as it does not consider the implementation and impact. The impact will be minimal given that the smugglers can easily transfer the additional tax to the China consumers. Also execution is difficult and will arise lots of legal and social issues which further complicate HK-mainland relationships. What the government should do is to ask China government to stop issuing multi-entry permit to those Shenzhen residents. It does not mean we turn hostile to the China visitors which are contributing lots to HK retail but our capacity simply cannot cope with the demand. We have no room to entertain more mainland tourists. There is an urgent need to build new capacity and the best location is build a supermall next to the border so the impact on our society and transport infrastructure can be minimal.
aplucky1
yes china and hong kong are the same size physically
great analogy
Giwaffe
Why rely on others when you can do something effectively yourself?
ghormax
But not fair, if you have to pay this in addition to a visa.

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