Imposing a tax on non-Hongkongers arriving by land could prompt a tit-for-tat move by mainland authorities, Leung Chun-ying warned yesterday.
The chief executive also said the proposal, floated by politicians as a way of curbing the influx of mainland tourists, was not feasible as the government could not tax non-locals without taxing returning Hongkongers, too. He did not elaborate.
However, a member of a government committee studying population policy argued a tax could be a "smart move".
"Mainlanders and foreign visitors coming to Hong Kong have offered a bracing effect to Hong Kong's tourism and economy," Leung said.
"They have created massive job opportunities. This is why we should not be conceited before getting rich."
The idea of an arrivals tax of HK$20 to HK$100 on non-locals who enter the city by land was proposed by Democratic Party lawmaker Sin Chung-kai and two People Power lawmakers. They raised it in response to a government forecast that the city would receive 70 million visitors a year within three years.
Yesterday Leung pledged to boost the city's capacity to accommodate travellers.
Professor Paul Yip Siu-fai, a University of Hong Kong demographics expert and member of the steering committee on population policy, said the idea of a tax was worth considering until the government had increased the city's capacity.
He said it would be a "smart move" as it would help regulate the flow of day-trip visitors from the mainland - 23 million a year, Tourism Board figures show.
"We need special measures at special times," he said, "It is not a discriminatory move. It is just … to reduce their impact on the daily life of residents."
People Power lawmaker Raymond Chan Chi-chuen criticised Leung for snubbing his proposal without much discussion.
"Leung owes Hong Kong people an apology for saying that they should not be proud before getting rich," Chan said
Democratic Party lawmaker Albert Ho Chun-yan also said that Leung's remark was an "insult to Hongkongers" because the tax suggestion had nothing to do with their being proud.
Frank Pak Fu-hung, founder of bird's nest retailer Home of Swallows, worried that local retailers would be badly hit by the tax, as mainland visitors' spending accounted for about 60 to 70 percent of their sales revenue.
Additional reporting by Tanna Chong