Letters.

Missing out on e-filing reward[QQ] As a chartered accountant who has used Electronic Lodgement Service from the very beginning, suffering all the initial costs for hardware etc, and ‘time cost’ sorting out bugs in the system, I feel very aggrieved with Gordon Brown when he says that he will pay £100 to companies and £10 to individuals who file their returns electronically. Why can’t he pay the same money to the profession or doesn’t he want the professionals to use e-commerce? Furthermore, his statement is both premature and misleading. My understanding is that he will require legislation, and he also fails to mention that these are one-off payments not annual payments – it will only be for the first electronic lodgement – and, finally he also fails to mention that the £100 payment to companies will not be made until 2001. I would suggest that if he really wants to encourage the use of e- commerce, he should also try and encourage the professionals in this country as well as the lay people. I also believe that people will only try new systems or methods if they trust the people advising them. Telling half truths and misleading people is certainly not the way to do this. DMB Davies, Ceredigion 21st century taxes needed The main problem facing Gordon Brown next week is that his advisers will be basing their recommendations on economic and financial theory as understood in the twentieth century. Today if a company has a reputable management team and is in one of three sectors (communications, media, or technology) then its share price will go up; otherwise it will go down. Standard financial theory suggests this phenomenon cannot go on for ever, but the pace of change is so fast that just when a technology share is running out of steam, along comes the next generation of product. Meanwhile, mainstream companies operating efficiently and profitably will see their share price steadily fall, as their management cannot demonstrate a strategy for growth. In such an environment, tax laws must change. The way to deal with share option schemes (approved or otherwise) is to charge income tax and national insurance on the value of the option granted (i.e. the number of shares times the market price of each share at the date the option is granted) and to charge capital gains tax at the time the option is exercised. This way, employees would stay loyal as they would exercise their options gradually to make best use of each year’s capital gains tax exemption. Malcolm Howard FCMA FCCA, Banstead, Surrey Selling the government a new ‘earnings tax’ I would agree with Heather Self that tax and National Insurance Contributions should be combined, and that assuming the electorate will not understand is insulting. Some years ago I worked in a factory where the slightest change to a pay packet would soon be picked up, even though most of the employees had not attained a GCSE in maths. When we had to put through NIC changes one year, we soon found ourselves explaining that NIC levels had changed and that this was ‘just another tax’. The compensating tax code adjustment had to be put through in a different week. If any government has the courage to abolish NIC, then they should do this by reducing the overall tax rate on lower earnings so that it is clear to Jo on the shop floor that this week his/her money has gone up. Perhaps the spin doctors could come up with a new name, such as earnings tax, so that the headlines could read ‘Income Tax and NIC Abolished! New Earnings Tax Means Higher Take Home Pay’. Everybody would understand that, even if somewhere in the small print it says: ‘Those on incomes above the national average are likely to pay more as there is now no ceiling on NIC’. Frances Haigh, Horsham, West Sussex All letters should be sent to: The Editor, Accountancy Age, VNU House, 32-34 Broadwick Street, London W1A 2HG Tel: 020 7316 9236 Fax: 020 7316 9250 Or e-mail us on: [email protected] Accountancy Age reserves the right to edit letters for space or clarity. Please include your title, company name and a daytime telephone number. ?: