A leading trade union has proposed the introduction of a preferential tax policy for new investment in order to create jobs. The proposal from Chan Yuen-han, Leung Fu-wah and Chan Kwok-keung, legislators from the Federation of Trade Unions, was put to Financial Secretary Antony Leung Kam-chung at a budget consultation session yesterday. The federation said the preferential tax policy would attract foreign investors and encourage entrepreneurs to invest in research and development. 'Few developed economies in the world adopt a preferential tax policy to attract investment. Preferential treatment should be adopted to encourage enterprises to invest in research and development. For instance, firms can enjoy preferential tax treatment if their investment on research and development exceeds a certain amount,' the federation said, without disclosing details. It hoped that the amount spent on research and development could be increased from 0.5 per cent of gross national product to one per cent. The federation also suggested the formation of an immigration policy for business migrants to lure mainland investors. It said profits tax should be changed from 16 per cent to a progressive rate between 16 and 17 per cent based on company profits, to increase government revenue as well as avoid the levying of a sales tax. Other measures suggested to solve unemployment included providing a preferential tax policy to firms hiring local staff who have completed employee retraining schemes, and for families hiring local domestic helpers. To avoid exploitation of workers when government departments contract out work, unionists suggested limiting their working hours while ensuring they were paid reasonable salaries. Departments should also contract out work directly to workers instead of going through a middleman. It also suggested pooling resources to set up a comprehensive scheme to help the unemployed, including economic support, retraining, and psychological counselling. Earlier, the Confederation of Trade Unions and the Democratic Alliance for the Betterment of Hong Kong proposed introducing a progressive profits tax system.