Yet, contrary to this fiscal conservatism, Financial Secretary Henry Tang Ying-yen has suggested ample room exists for tax breaks in his next budget. It is understood he is prepared to broaden the tax bands and lower tax rates, while maintaining the standard tax rate at 16 per cent.

This may appear at first sight as good news, especially for the middle and working classes, who suffered the most during the Asian financial crisis and the Sars outbreak. Many of them have yet to benefit from the economic upturn, as small- and middle-sized enterprises are still inclined to suppress wages.

In theory, a reduction in salary tax could ease the burden of the working class and promote internal consumption. Unfortunately, Mr Tang has also made it clear that he would seriously consider reforming the tax regime. He has been toying with the idea for a sales tax to broaden the tax base.

His message is confusing. Any tax reduction at this stage will contradict his intention to create a new tax. These mixed signals have undermined the credibility of the government. I am opposed to the introduction of a sales tax, which, like drugs, is addictive. Experience from around the world has shown that the index of 'taxable' products taxable will only lengthen.

The administration takes pride in its fiscal philosophy of 'a big market and a small government'. But a sales tax will interfere with the market, as it is basically a tool for redistributing wealth.

A sales tax will also shake the foundation of one of our four economic pillars - tourism. Once Hong Kong loses its attractiveness as a shopping paradise, the damage to our 'smokeless industry' will be irreparable.

Salary earners are already required to set aside 5 per cent of their wages for the Mandatory Provident Fund. High rents and mortgage payments have virtually become an indirect tax. Secretary for Health, Welfare and Food York Chow Yat-ngok has also recently started preparing the public psychologically for a medical and health-care tax.

A sales tax might well turn out to be the straw that breaks the camel's back.

However, it is simply the wrong time for officials to even contemplate any tax reduction to appease the public. The commercial sector, which is the first to benefit from economic recovery, could even handle a modest hike in profits tax.

As for the working class, a policy to keep the fees and charges unchanged and bring welfare expenses back to their original levels would be adequate. As long as the size of the bureaucracy and its total spending are confined to 20 per cent of the gross domestic product, the government can certainly balance its books in the long run.

In fact, it will be easy for the finance chief to devise a balanced budget for next year. This is because Hong Kong has in effect reverted to its high-land-premium policy, since the introduction of the 10-point measures to stabilise the property market.

It would be presumptuous for Mr Tang to raise public expectation for a tax reduction at this stage. A piecemeal approach to reduce tax - only to introduce a new sales tax later - is simply illogical. The only explanation for his eagerness to cut tax now is, perhaps, to score some political points for himself.

Albert Cheng King-hon is a directly elected legislator