A review of property rates will be conducted in the middle of the year, Financial Secretary Donald Tsang Yam-kuen announced yesterday. But he warned provisional legislators that he did not favour reforms on land rent. Although rates were reduced from five per cent to 4.5 per cent for one year in the Budget on Wednesday, unionist Lee Kai-ming asked for them to be cut by a further 0.3 of a percentage point. Mr Tsang disagreed: 'You wanted to eat up the bones . . . If the surplus is cut further, it will send a signal to the international community about whether we are changing our fiscal strategy or deciding to provide more social welfare.' He said that a review would be undertaken on whether rateable values should be re-examined every year. The Government is also reviewing structural reforms of the municipal councils, which share the rates revenue, and the district boards. At present, rates are charged on a property's rateable value which is revalued every three years. Chan Yuen-han of the Democratic Alliance for the Betterment of Hong Kong said: 'We should review the land rent also, as it is linked to the rates.' Article 121 of the SAR's Basic Law states that the lessee of land which was granted before the handover without the right of renewal is not required to pay an additional premium but has to pay annual rent equivalent to three per cent of the property's rateable value. Mr Tsang responded: 'If we eliminate the collection of land rent, does it mean we have to demand the lessee pays the additional premium? It is fair for them to pay the land rent?' General Chamber of Commerce chairman James Tien Pei-chun, of the Liberal Party, asked for a greater reduction in the profits tax - which was cut in the Budget from 16.5 per cent to 16 per cent. He said he wanted it cut to 15.5 per cent. Mr Tsang said: 'The international community would view this as a significant gesture. My proposal of cutting 0.5 percentage points is to provide psychological relief to the business sector amid the financial turmoil.'