Mervyn King Attacks Bankers Who Try To Pay Less Tax On Bonuses

Sir Mervyn King, governor of the Bank of England, has waded in to the row over bonuses at Goldman Sachs warning it would be "rather clumsy" and "lacking in care" of big banks to attempt to defer bonuses to allow highly paid bankers to pay a lower rate of tax.

Goldman is considering deferring parts of bonuses from 2009, 2010 and 2011 which were due to be handed to bankers in the coming weeks beyond 6 April when the top rate of income tax will fall from 50% to 45%.

Appearing before the Treasury select committee, King told MPs: "I find it a bit depressing that people who earn so much find seem to think that it's even more exciting to adjust the timing of it to get the benefit of the lower tax rate ... knowing this must have an impact on the rest of society, when even now it is the rest of society that is suffering most from the consequences of the financial crisis".

He went on to say that it would be "rather clumsy" and "lacking in care". "In the long run, financial institutions do depend on goodwill from society," said King.

His words are the latest condemnation against the Wall Street firm which is due to publish its full year results on Wednesday and will hand out bonuses for 2012 shortly afterwards.

Prime minister David Cameron and chancellor George Osborne faced criticism on Monday for refusing to step into the row. The Treasury said: "We do not comment on the tax affairs of individual companies, but we are clear that everyone must pay the tax they owe."

Lord Oakeshott, the former Treasury spokesman for the Liberal Democrats in the Lords, had pointed out that this contrasted with the reaction in June to the tax affairs of comedian Jimmy Carr which the prime minister described as "morally wrong".

The potential for banks to defer the bonuses into the new tax year has added a new twist to the annual row over the payouts to bankers. Goldman Sachs is among a handful of US banks due to publish full year results this week and inform their staff about the size of their bonuses. European banks – including UK banks such as bailed-out Royal Bank of Scotland – make their announcements in February and March.

Goldman is regarded as among the most generous of the payers in the City. A year ago, it set aside £8bn to pay its staff – an average of £238,000 each – a figure it is expected to at least match for 2012.

Powered by article was written by Jill Treanor, for on Tuesday 15th January 2013 12.10 Europe/London © Guardian News and Media Limited 2010


image: © Bank of England

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