Frank Martin's comments come after the Financial Secretary Anthony Leung-Kam spoke on Wednesday of a projected budget deficit of around HK$60 billion, and called for a community-wide debate on the best way to tackle it.

Mr Martin commented that in his opinion, increasing taxes in the famously low tax jurisdiction in order to rein in the ballooning deficit would reduce the spending power of the region's consumers and businesses, thus worsening the already dire economic situation. However, the AmCham chief agreed with the Finance Secretary's remarks that the deficit situation was not a passing phase. 'I don't think there is any quick fix or any instant remedy for this particular problem,' he mused.

'Salaries tax or profit tax increases would very likely do more harm than good,' he explained. 'The government has to find a way to cut spending and that will be very difficult.'

There was more bittersweet news for the SAR last week, as a survey released by the Chamber of Commerce revealed that 73% of its members believe that Hong Kong's economic prospects for next year are poor, compared with just 2% from the last year's survey.

However, participants also commented that they believed that the economic downturn would be a relatively short term situation, and that they had long term confidence in the jurisdiction's infrastructure, location, communications network, and tax system.