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Friday, February 26, 1999 Published at 11:45 GMT


The executive: Let businesses run themselves



Name Sam and Dorothy Jones
Married Yes
Children Two, both grown up
Gross earnings (employment) 10,000pcm (Sam 7,500 and Dorothy 2,500)
Gross savings income 800pcm
Mortgage payments n/a
Pension payments n/a
Cars Two (one company, one private)
Car insurance 140pa
Household insurance 450pa
Beer 4 pints/week
Wine 4 bottles/week
Spirits 0 bottles/week
Tobacco 0 packets of 20/week
Petrol 30 litres/week

Sam Jones is Regional Corporate Director for the Royal Bank of Scotland for Lancashire. The views expressed to BBC News Online are his alone, not those of his company. His wife Dorothy is a university lecturer.

Mr Jones's main plea to the chancellor of the exchequer is for taxation, both business and personal, to be simplified wherever possible.

He advocates this particularly for businesses, which he describes as weighed down with administrative burdens due to measures such as the working time directive, the minimum wage and the working families' tax credit.

'Leave businesses to run their own affairs'

Mr Jones follows this through with the opinion that Gordon Brown should not get too involved with the way businesses are run by tinkering, for example, with treatment of spending on training or research and development.

"Business achieves more if it decides its own spending, rather than making decisions for tax reasons," is his general view. It is an opinion which recurs in his suggestions in other areas.

The only exception is the case of high-technology start-up businesses. Drawing on his experience, Mr Jones believes that tax benefits for this type of company should be extended. The sector is very volatile and he suggests allowing investors to write off losses in companies which fail against profits from those which succeed.

More generally, Mr Jones would like corporation tax to be reduced by 2%, but he admits that this would be a very large cut and he is not hopeful: "That would be my ideal, but I am a realist."

The euro - a plea for certainty

Regarding the euro, Mr Jones strongly advises the chancellor to use the Budget to move towards ending the doubt once and for all. That way, businesses would be able to plan their significant costs in areas such as IT and marketing.

"Businesses are looking above all for certainty. Whether they are for or against, the largest issue over the euro is the lack of certainty," he says. "Even businesspeople opposed to the euro would prefer to know that the UK definitely will join rather than keep the current state."

One corollary of joining the euro would appear to be lower interest rates and Mr Jones would welcome this strongly from a business perspective. However, he recognises this would hit savers such as himself - and particularly people such as those pensioners who get a significant part of their income from savings.

Savings market's new products

But Mr Jones still does not want the chancellor to intervene too much in this area, artificially distorting the market on savings schemes and making it too convoluted

"The savings industry is developing new longer-term products - such as 5-10 year bonds - at higher rates which should give investors good returns while the economy as a whole enjoys the benefits of a low-interest environment," he says.

On pensions, Mr Jones would prefer in general for Mr Brown not to invent complicated new schemes as the government scrambles to deal with the problem of an ageing population and a declining state pension.

He recognises that some people outside company schemes might have trouble securing satisfactory top-up pensions - perhaps those in their 40s who do not have the amount of time that younger people have. "But people's record of saving for a rainy day is not good," he says, "And 40 is often the peak for people's spending, so whether many would be able to take advantage of any special concessions is problematical."

Taxing for specific spending

On excise duties, Mr Jones admits "one pays for one's pleasures" and fully expects the chancellor to enact his usual rises on alcohol and tobacco.

He would like to see large rises in duty on petrol as a means of discouraging car travel if possible. However, the money raised from this should go directly into improving public transport.

Mr Jones follows this theme of using taxes for specific purposes on income tax.

"No-one welcomes an increased burden. But I am strongly of the view that unless more resources are put into the country's education system then the government won't achieve its aims of raising standards."

Mr Jones says he would prefer that spending was cut in other sectors. But if that really proved impossible then he would be prepared to see something like an extra 1p on the higher rate of tax - the "least unwelcome option" - provided it went directly into what he sees as a vital area.



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