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I tend to follow the example of Zhou Enlai and the French Revolution when thinking about Gordon Brown and his Budgets. When asked by Henry Kissinger about the events in France nearly two centuries earlier, the Chinese premier famously replied: "It is too soon to tell".
Often, it is not until the accountants have pored over the fine detail that what the Chancellor really meant is revealed. Often you wonder if it was what was intended but, hey, they are not going to own up are they?
So I usually sit tight and wait until my accountant sends me a little booklet telling me things I won’t understand anyway.
But there was one thing I did understand, and having praised Gordon Brown in my last offering, I have to criticise him this time. Fickle, I know, but I really cannot understand why, having provided a welcome tax perk for employees seven years ago, he cut it off so abruptly this year.
It was in 1999 that Gordon Brown launched the Home Computing Initiative (HCI), which meant that employers could provide laptops or PCs with a value of up to £2,500 to employees free of income tax or National Insurance. It meant that in effect the employer loaned the employee the computer for three years with payments taken monthly from the pay packet.
So basic-rate tax payers benefitted from a 33 per cent discount (22 per cent tax relief, 11 per cent NI contributions). Of course higher-rate tax payers were even better off. And usually they got to keep the computer.
It took five years for the momentum to grow but it really took off in the last two years after it was relaunched in 2003. Sadly from April 6 this year, it will cease. Now, while I realise that the BNudget is supposed to be top secret, and far be it for me to question whether there is a question over "joined up Government" here, but might the left-hand (the Department of Trade and Industry) know what the right-hand was planning when, on March 15, the DTI offered the scheme to its own staff? They will be OK, apparently, but colleagues at the Department for Work and Pensions missed out because there wasn’t time before the deadline to get the scheme up and running (not that the DWP people are likely to get much sympathy from most of us small business people, if Times Online's weblog is anything to go by).
Apparently some half a million employees have taken advantage of the scheme in the last two years, which must have been a huge boost for the UK IT industry. Now they are gnashing their teeth. Not surprising
given that the scheme will cease abruptly this year. Surely the Chancellor should have phased in the ending of it?
Our IT industry reckons it will cost it £1 billion in lost revenue and cause some 60 firms to close and 2,000 people to lose their jobs. I know the industry is guilty of hyperbole (those screens are never that
bright, the computer is never that fast and they still freeze at awkward moments), but even if they are half right it will be a huge blow.
I’ll bet that the reason it’s been axed is that the original Treasury estimate of what it would cost annually was £5 million. This soared to £150 million a year. That’s a lot of money but let’s say the IT industry is half right and 1,000 people go on the dole. Let’s say they are all 18 to 24 year olds and get £44.50 a week in unemployment benefit. If they stay unemployed for a year it will cost the UK some £2.3 million, And as they won’t be earning money the Revenue will not collect anything from them in tax and NI.
The industry has got together to form a "Save HCI" website, not that it will make any difference.
A spokesman for HM Revenue and Customs said that the Government wanted to focus resources towards people who have not been able to benefit before – "the unemployed and the elderly." Bit difficult to lobby against them.
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