Budget 2007, which will be tabled by Finance Minister Abdullah Ahmad Badawi, today should abolish tax on monetary gains from Employees Share Option Schemes (ESOS).

Under the Budget 2006, employees who exercise their ESOS will have to pay tax on the value of the discount given when the options were first priced.

This is absurd. 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. Otherwise, they might as well buy the shares from the open market

Tax imposed on ESOS negates the very purpose it is given to employees. It is meant to boost the morale and with that, their productivity and contribution to nation-building.

The government, led by Abdullah, is stressing on the importance of human capital. If this is the case, the government should relook at some of its policies involving the country's human capital.. This will include reviewing its tax policies on ESOS.

Imposing tax on monetary gains from shares bought from the open market is acceptable because only those who can afford it buy shares. ESOS, on the other hand, is given to salary-earning employees, most of whom have to seek financing to exercise their options.

Please, Mr Finance Minister, take another look at the policy.