Deloitte Touche Tohmatsu's Hong Kong partner Yvonne Law was quoted by Hong Kong daily The Standard as suggesting that the Tsang administration should return part of the fiscal surplus to taxpayers by returning salary tax bands and rates to their levels in the 2002/2003 tax year. By doing so, the basic tax allowance for individual taxpayers would increase to HK$108,000 from HK$100,000 and the standard tax rate fall to 15% from 16%.

"The move can enable the public, especially the middle class, to share the benefits brought by economic recovery," noted Law.

Law also urged the government to reconsider its decision to introduce a sales tax, warning that such a measure threatened to damage the retail and tourism sectors, and should be introduced only as a last resort.

Tsang, who is due to make his maiden policy address on Wednesday, has inherited an economy in the midst of a strong rebound, and he has pledged to maintain Hong Kong's "simple low-tax regime," which has helped to attract foreign companies to the territory in droves in the past year.

According to Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse, 2004 was Hong Kong’s most successful year ever for investment promotion. Invest Hong Kong assisted 205 foreign and Mainland companies to set up or expand operations in Hong Kong last year. By the year's end, 5,943 mainland and overseas companies had either regional headquarters, a regional office or a local office in the city. The figure is up from 5,414 in 2003 and 4,867 in 2002.