In his budget speech, delivered in March, Mr Tang stated that proposals for a sales tax would to be put to a public consultation some time during 2005.

However, in the meantime, the resignation of the former Chief Executive Tung chee-hwa and the subsequent appointment of new leader Donald Tsang, who has pledged to reorganise the government's decision-making bodies, has meant that the commencement of the consultation process will be delayed at least until early 2006.

Given that Tang has estimated that it will take at least three years for the government to finalise legislation and set up a sales tax collection system, this means that a sales tax will not be in place until 2009 at the earliest.

As part of its annual assessment of the Hong Kong economy, the IMF stated earlier this week that Hong Kong should set about introducing a sales tax at the earliest opportunity in order to ease the territory's dependence on volatile non-tax revenues such as investment income and land sales.

Nonetheless, Tang, who supports the introduction of the tax, is confident that there will be sufficient time for consultation, and told legislators on Monday that a timetable will be revealed in his next budget speech in March 2006.

"A goods and services tax is a reasonable and equitable way to smooth out bumps in the revenue stream," he informed a legislative panel session.

The proposition of a sales tax is not popular, especially among those representing low income groups and traders. According to a survey of 651 retailers published in March this year by a lobby group established to fight the possible introduction of sales tax, known as the Coalition Against Sales Tax (which includes 36 associations and ten retail industries), 90% of firms are opposed to the tax.

Around two-thirds of the respondents also expressed concern over the cost of administering the tax, while 80% concluded that it would curb consumption, strangle the city’s economic recovery and “tarnish Hong Kong’s reputation as a shopping paradise”.