According to the Inland Revenue Department, around 12,700 applications for deferral of salary, profit, and property taxes were made between April and October, up from just 9,900 in the same period last year. This is expected to produce a temporary shortfall of around $100 million.

However, although disappointed, the tax authorities in Hong Kong are far from surprised, citing lower than expected income as the reason for the surge in applications. 'We expect the increased applications for deferring tax payment would prompt a drop in actual tax revenue, compared with the amount we assessed earlier,' explained the Commissioner of Inland Revenue, Alice Lau.

According to Ms Lau, the government had originally expected to receive $105.5 billion in tax revenues this year, compared with the $100.4 billion collected last year, but the global economic slowdown and the after-effects of the September 11th terrorist attacks have dashed their hopes.

The Inland Revenue Commissioner also revealed last week that reduced turnover on the stockmarkets and a property slump will almost certainly adversely affect stamp duty receipts, and that a 4% reduction in the Jockey Club's betting turnover signals that a betting tax shortfall is likely.