Tung Chee-hwa is to announce today that Donald Tsang Yam-kuen will take over as chief secretary for administration when Anson Chan Fang On-sang retires in April. He will also appoint Antony Leung Kam-chung as the new financial secretary to replace Mr Tsang, the South China Morning Post has learned. Mr Leung, Asia-Pacific chairman of JP Morgan Chase, will be only the second person outside the civil service to hold the post; the other was Sir John Bremridge. Mr Leung will give up a $15 million a year pay package for $2.45 million in his new job, which is expected to be on contract terms. But there will be fringe benefits, such as the right to live in the official residence of the financial secretary near Ocean Park in Aberdeen. Beijing and Hong Kong will make an announcement at the same time. The Basic Law gives Beijing the final say in the appointment of key SAR officials. Mr Tsang disclosed to a group of students on Tuesday that Mr Tung had discussed the vacancy left by Mrs Chan several times. He said he had told the Chief Executive three times that the best option would be for him to remain in his present position, prompting speculation that he had turned down the offer. But policy bureau chiefs are expected to be told the news this morning, while letters will be sent to executive councillors and lawmakers. Tax experts say Mr Leung's biggest challenge is likely to be overhauling the revenue system. He may also face the controversial task of introducing new taxes. Many industry observers and tax experts believe that amid diminishing property revenues, traditionally the major source of revenue for the Government, Hong Kong will face a problem of structural deficits - where operating income fails to keep up with operational spending - in the coming years. A goods and services tax or the revamping of such indirect taxes as the quarterly property rates and many other government charges could be on the agenda. Mr Tsang set up a committee last year to review these possibilities but it is not expected to report until November.
