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15. The point may soon be reached where additional programmes
cannot be financed without an increase in the level of direct
taxation. It is never likely to be possible, without wholly
unacceptable economic consequences, to increase direct taxation to the levels prevailing in advanced Western democracies. But present levels are very low, even by Asian standards, and modest increases would probably be accepted by local opinion provided it could be demonstrated that they were necessary. There is also scope for
a further look at tax structures.
TRADE UNIONS
16.
At present between 20 and 25% of the workforce in Hong Kong belong to trade unions. The weakness and fragmentation of the
trade union movement, and the absence of collective bargaining on any
significant scale have been the subject of a good deal of criticism in this country, particularly from the TUC. Professor Turner's long delayed study, which is now expected to be completed shortly, may point the way forward. But there are major difficulties, among them the small scale of much of Hong Kong's industry, the lack of any real trade union tradition in China, and, in particular, the division of political loyalties in the trade union movement. Pro- Peking unions represent more than three-quarters of the local member- ship; some of the remaining unions are pro-Taiwan and the others politically non-aligned. The most sensible policy would probably be to seek to encourage the non-aligned unions, now mostly in the public sector, but it is not easy to see how this might be done.
DEFENCE
17. Hong Kong is indefensible against an attack from China, which poses the only external threat to the Colony's security. Britain
is nevertheless responsible for the defence of Hong Kong.
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