Hong Kong Bank's incoming chairman, Vincent Cheng Hoi-chuen, who will take up his new post in May, has urged the government to overhaul the city's tax regime with concessions for wage-earners. 'The government should consider whether it is suitable now to introduce tax reforms before the economic situation turns sour,' Mr Cheng said after Hang Seng Bank, of which he is chief executive, reported its full-year results. The government is expected to report a budget surplus for the financial year to the end of March as opposed to the original estimate of a $42.6 billion deficit. Much of the turnaround has been due to higher-than-expected revenue from the resumption of land sales and tax receipts. However, Mr Cheng warned that the government should move towards less reliance on non-recurrent revenues, such as land auctions, and broaden the tax base, which is still narrow. His comments echo recent calls from academics and accountants that Hong Kong's salaries-tax structure needs to be reformed. Deloitte Touche Tohmatsu senior tax partner Yvonne Law Shing Mo-han said the budget surplus, which she expected to reach $25 billion this financial year, might be wiped out in the 2005-2006 period, plus or minus $5 billion. 'Land sales will continue to bring in revenue year after year. But whether it will be another record-breaking year is really doubtful,' Ms Law said. She said economic growth would also slow to about 5.5 per cent in 2005, from about 8 per cent. Ms Law's specific tax suggestions include reducing basic personal tax allowance to $90,000 from $100,000 and doubling the child allowance to $60,000 to support the government's bid to boost the population. She said a goods and services tax should be a last resort.