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paragraph 1) will do much to meet the criticisms in (a) to (f) above if these plans mature on the due dates. (It would be helpful if these plans could be made public soon.) Action on (g) and (h) above also appears necessary if industrial conditions in Hong Kong are to be brought up at least to the best in Asia (excluding Japan which is, of course, at a much more advanced stage of industrial development).
6. Some critics have also focussed particular attention on
Hong Kong's record in the application of ILO Conventions. In this respect Hong Kong compares favourably with her Asian neighbours; but HMG, as an active member of the ILO, have a particular responsibility for ensuring that Hong Kong makes steady progress in this regard: and apart from measures taken by Hong Kong to meet the criticisms in paragraph 4 above, which should in themselves
improve Hong Kong's record, the Ministerial review instituted this year should lead to further progress.
Fiscal
7. The most obvious distinction between Hong Kong and other
industrial societies at a comparable level of development is the comparatively low and narrowly based level of direct taxation. (It is of interest that only 180,000 out of the total population pay salaries tax - husbands and wives counting as one person
and no taxes are levied on income arising from investments abroad.) То
some degree it must be accepted that the present system has been conducive to growth; that growth has resulted in a rapid rise in taxation receipts (from $M1808 in 1970/71 to an estimated $M3612 in 1975/76); that political uncertainties require a measure of discount for foreign and domestic investment; and that in the 1950s and 1960s there were non-fiscal constraints on the growth of certain
kinds of social expenditure. On the other hand, it is important that self-imposed fiscal limitations should not unnecessarily restrict implementation of social policies which are essential for the balanced growth of an industrial society. It is common ground
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