Giveaways in next Wednesday's budget could be at least 30 per cent less than the HK$33 billion doled out last year.
Financial Secretary John Tsang Chun-wah is expected to cut the salaries tax rebate and property rate waivers.
The salaries tax rebate was HK$10,000 last year and cost the government HK$8.4 billion.
Tsang said on his blog on February 9 that tax rebates and one-off relief measures would "very soon become history". He waived rates for all four quarters in the 2013-2014 financial year, subject to a ceiling of HK$1,500 per quarter for each rateable property. That cost the government HK$11.6 billion.
"Scaling down the rates waiver is one of the most effective ways to cut back the relief package. The finance chief will wind down the package probably in two or three years' time," a government source said.
Tsang might also drop the HK$1,800 electricity charge subsidy for each household, which cost the government HK$4.5 billion last year.
Public housing tenants, who last year did not have to pay rent for two months, are likely to get just a one-month waiver.
The government's surplus for the current financial year, some of which was earmarked by Chief Executive Leung Chun-ying in his policy address last month to pay for measures to help the poor, is estimated to be between HK$10 billion and HK$20 billion, compared with HK$64.8 billion in the previous financial year.
Ivan Choy Chi-keung, a political scientist at Chinese University, said the reduction of handouts could spark a backlash from the middle class, who were already upset about being ignored in the policy address.
"The middle class expects some consolation in the upcoming budget," Choy said. "They will be angry if their expectations are not met."
He said the five Liberal Party lawmakers were unlikely to support the budget if handouts for the middle class were reduced.
Raymond Ho Man-kit, a convenor of low-tax advocacy group Momentum 107, said: "It is the responsibility of the government to pay back taxpayers when it has a surplus."
Ho also said that one-off budget relief measures should be scrapped.
"It is social welfare. If the government thinks the poor people need more assistance, it should make the measures long-term commitments and not one-off measures," he said.