01 August 1997

FREQUENT FLYER schemes such as Air Miles are the target of a new tax imposed because the Govern-ment believes the system is being abused. Says a Department of Social Security spokesman: 'We are doing this to distinguish between bona fide expenses incurred in the course of business and those that are not.' The tax, which will be levied from April 1999 via the National Insurance scheme, will raise around £10m pa, but there are scant details yet as to how it will work in practice - nor how the value of an incentive will be calculated. 'The value you put on it is how much it could be sold for', says the DSS. The direct-sell, no-frills air carrier EasyJet has long been lobbying for such a move, labelling frequent-flyer schemes 'disguised bribery'. British Airways-owned Air Miles professes an insoucciant stance to the tax: 'Air Miles are aspirational and motivational', says Wanda Goldwag, director of relationship management. 'Employees remember a trip to Paris long after cash is gone. This isn't going to change because the cost of awards to employers increases.'