Spurs have just ended the season in third place in the Premier League, but boss Mauricio Pochettino allegedly wants to make a £150m overhaul of his first-team squad to boost the club's chances of ending a decade-long wait for a trophy.
However, Dawson - who spent 10 seasons at Spurs before joining Hull City in 2014 - does not think that the club's hierarchy will want to hand the Argentine significant funds ahead of next season.
The 34-year-old told talkSPORT: "Man City are, in my opinion, untouchable. They've got an unlimited budget that the owners keep ploughing it in, it's not a problem for them. So for teams to catch them - how hard is it going to be? Are Spurs going to be able to catch them? I'd love to see it.
"It's finances; are Daniel Levy and Joe Lewis going to want to spend that kind of money? In my opinion I don't think they are. You hear Mauricio Pochettino and he is getting frustrated. I think the main aim for him at this time is make sure you keep those players you've named (Harry Kane, Christian Eriksen, Dele Alli).
"There's talk about Toby Alderweireld [leaving], who I think is a top, top player, give him his wages. Give him what he's worth. Otherwise if one goes, it's a roll on effect where they all think 'well, he's gone and he's gone."
Spurs may be restricted in the transfer market this summer due to the cost of the club's new stadium.