Financial Secretary Sir Donald Tsang Yam-kuen will reveal his Budget on February 18. This Budget is likely to be a closely followed one as the economy has nosedived in recent months. Many political parties and community groups are calling upon the Government to 'do something', and various tax cuts could be expected. The Citizens Party believes the Government must look at both short and long-term measures to revitalise the economy. In the immediate term, the Government needs to send the right political signal to the community that we must ride out the tough times together. A short-term measure could be for higher-paid public officers to receive no salary increase this year. The Government should reduce property rates substantially - by at least 50 per cent. This will help every rate-payer in Hong Kong, which can well afford this. The main attraction of this measure is that it will be felt immediately. Another measure could be to permit residential property owners to deduct their mortgage payments from taxable income for the next two budget years. This will again help people in the immediate term. For those who have more than one property, they should only deduct payment from the property in which they live. A medium-term measure is for the Government to better 'manage' the Hong Kong dollar's peg to the US dollar. While Hong Kong people know that our Government is committed to the peg, it seems that the international financial community is less certain. The Government must rebuild that confidence. The solution lies in 'de-managing' the link. Instead of intervening well before the peg rate of HK$7.8 to the US dollar, which the Hong Kong Monetary Authority (HKMA) has done for some time, it should only do so when the Hong Kong dollar weakens to that level. Early intervention at around $7.75 means the effective peg is not $7.8. We propose the HKMA eases intervention only very gradually in order not to create the mistaken impression of an assault on the Hong Kong dollar which the HKMA cannot defend. When the peg was originally designed in 1983, it was intended to allow any person to convert directly with the currency board - that is, the HKMA. The Government decided however to limit conversion to three note-issuing banks only. A way to regain confidence is for the Government to allow anyone to convert directly with the HKMA. The HKMA has a history of over-managing the currency-board system because it seems to fear Hong Kong people losing confidence and rushing to change their Hong Kong dollars. As there is no mass panic, and there is no reason for there to be, the HKMA should use this fact to re-establish international confidence in the peg. The Citizens Party has no doubt that the peg should stay and that Hong Kong has the reserves needed to meet the pledge of convertibility. A longer-term issue is for the Government to revisit its policy of 'positive non-intervention'. The phrase belies the fact that the Government intervenes massively in many areas of the economy. For example, the Government controls land supply and is a key provider of housing. However, its policy has resulted in a housing shortage and until recently, extremely high prices. It was precisely government intervention that put some businesses in privileged positions and created monopolies, such as in transport and utilities. The uncompetitiveness of many of Hong Kong's domestic markets causes prices to business and consumer to be higher than they should be and services more limited. This makes the economy's overall performance fall below its potential.