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I can fully understand Yusof Hussein's lament about taxes being imposed on the benefits accruing from Employee Share Option Schemes, after all, who does not want to reduce taxes wherever possible? But I regret to say that the basic grounds of his opposition to the liability of ESOS benefits is incorrect.

Yusof holds that "ESOS is part of the benefits given to loyal and dedicated staff. Surely, it has to be discounted because this is part of their benefit." It is precisely for this reason that they are taxable! What the employees in effect enjoy is the savings they make from buying shares at a price lower than the prevailing market rate. Such savings is the gift or allowance that the employer gives them by selling the shares cheaper. So why should the employees be not taxed? The savings are as much as their income as increments and bonuses are.

Yusof can draw some comfort from the amendment made in the 2006 Budget. Now, dependent on the change that the shares may undergo, there may be no benefit at all deemed to be enjoyed by him and therefore there would be nothing to tax him on. Previously, as long as the employee exercised his ESOS option even at a time when the "benefit' enjoyed by him had eroded considerably, he would have been slapped with tax on his original deemed benefit.

Perhaps what we should do is to charge tax on persons who take suspicious loans to buy shares in any company under dubious arrangements. In fact, higher taxes should be imposed if such persons further attempt to squeal out of situations where they are caught with their hands in the till by claiming heroic motives to themselves. That would be the best avenue to adopt.