A property tycoon has come out in support of a mild increase in profits tax, of about 1 to 2 per cent to ease the budget deficit. The views of New World Development chairman Cheng Yu-tung echo the stance of a number of prominent business chambers that a rise is acceptable. However, economists urged the government to adopt cost-cutting measures first. Supporting a moderate rise in profits tax, Mr Cheng said yesterday: 'The [government] expenditure is so huge, you must increase income.' He said such an increase would not discourage foreign investors. The Hong Kong General Chamber of Commerce is in favour of a mild increase along with cost-cutting measures. Executive councillor and Liberal Party chairman James Tien Pei-chun has said a small rise is acceptable if civil service pay is cut by 6 per cent. Meanwhile, Financial Secretary Antony Leung Kam-chung yesterday met a group of economists for talks on how to tackle the budget deficit. Hang Seng Bank chief economist Vincent Kwan said the government should cut costs first before increasing the tax. HSBC chief economist for Greater China, George Leung Siu-kay, agreed, adding: 'If there is any shortfall [of revenue] and there is the need to do something on the taxation side, I think the government can consider it but on the condition there is no extra burden on Hong Kong residents and it does not affect Hong Kong's international competitiveness.' Yesterday's meeting was among a series that Mr Leung is holding with various sectors on how to tackle the deficit. He will meet the Federation of Trade Unions next Monday and the media on Tuesday.