RAPID RESPONSES

Data deluge

Craig Drake rightly emphasises the importance of institutions making big data “work for their business” [Big industry responses are needed to big data explosion, yesterday]. Data must be seen as an asset for businesses and managed properly. If it’s not, then it just becomes a liability.

The financial services industry is only now catching up with other sectors such as pharmaceuticals when it comes to managing big data. Tighter regulations such as Dodd-Frank, MiFID II and Basel III have acted as a catalyst for action. It’s not enough for firms to simply store data in isolation. In order to comply there must be a full audit trail. Data management is being made even more challenging – in addition to storing a vast quantity of tick data, banks must record all telephone calls. If this wasn’t enough, email archives are expanding to thousands of terabytes and firms have to track and monitor other forms of communication such as instant messaging and social media. Banks and firms of all sizes must therefore address their big data management issues before they spiral out of control.

Daniel Simpson
chief executive, Cadis

Craig Drake is right that big data can provide competitive advantage, but the question he neglects to answer is: does the City have the skills to turn this tide of data into economic opportunity? My own experience confirms the widely-held view that there is a huge chasm between the amount of people needed to analyse data, and the amount of talent trained in the art of doing so.

Consider the Institute for Advanced Analytics at North Carolina State University – the first of its kind. On average, each member of the class of 2011 had 14 interviews and two job offers, and the average base salary offer was $81,500. In a tough job market, this illustrates the increasing demand for those trained in big data analytics. If industry and the UK government don’t invest in those skills now, we risk losing out to countries like China and India, where the level of investment in tech skills is on the rise.

Geoffrey Taylor
academic programme manager

SAS UK

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Barely similar

Whereas I normally agree with Jamie Whyte’s sentiments in his regular column, I must strongly disagree with his comparison of lap dancers to traders [Strippers can show us bankers’ just rewards, Wednesday]. Yes, they both are examples of receivers of discretionary income. But whereas lap dancers are self-employed, have no allegiances to the bar they work in or to each other, and have no need to interact in any way with each other or work together, traders are employees and should be considered assets of the company they work for. Traders don’t work alone, they work in a team, they constantly interact with other traders, sales, compliance, business management and support functions. They need to perform in a way that fulfils the business strategies and goals of their management. Suggesting that they should adopt the role that lap dancers do is to suggest that they should only think of themselves, their own short-term profits, and ignore company strategy, teamwork and the longer-term implications of the risk positions they take on. While an amusing and thought-provoking analogy, Jamie’s suggestion is nonsense and goes completely against instilling a responsible long-term attitude to investment banking and risk-taking that I think we all unanimously wish to promote.

Tim Shoebridge

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Untangling tax

I appreciate Allister Heath’s well-argued editorial articles, even though I often disagree due to ideological differences.

Regarding his piece on Wednesday [Why capital gains tax isn’t too low], I’d just like to point out that whereas he implies that corporate earnings are triple-taxed, I believe it is in fact double-taxed, at most. It is indeed true that corporate taxes are paid on income that is then subject to personal dividend/capital gains tax. (In reality, effective corporate tax rates tend to be low, though.) But capital gains taxes do not come on top of dividend taxes; they are rather distinct and depend on how a company's earnings are transferred to shareholders. If such earnings are paid as cash dividends, then there is less money left over to increase the value of the company and hence the share price (which triggers capital gains taxes). By contrast, a company can reinvest all its earnings, in which case they will (should) benefit shareholders in the form of capital gains only. So investors end up paying either dividend or capital gains tax on a company income, but not both on the same amount.

Regarding this double taxation, I would suggest that rather than have a low dividend tax rate, companies could simply deduct dividend payments from their corporate tax bills. This is what Alan Greenspan favoured instead of US President Bush’s tax cuts of 2003.

Then, whether dividend and capital gains taxes should be lower than earned-income taxes is largely a question in terms of whether a government chooses to incentivise work or wealth. Personally, I favour parity.

Everett Brown
economist, London

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Held accountable

I watched Nick Clegg’s interview on BBC Breakfast TV yesterday morning and was furious to hear him say “for those who can't afford an accountant to fiddle their taxes”. How dare he. I assume therefore that he does his own return?

I’m fed up of politicians referring to accountants as one degree away from criminals. Professional, qualified accountants like myself have a high degree of integrity and abide by the UK tax laws, we do not “fiddle” taxes.

Joe Lee ACCA FMAAT
principal, Apple Accountancy Services