It's all Goldman Sachs' fault says Matt Taibbi

[Jan Klimkowski]

Breaking news: Goldman finds the moral compass it dropped decades ago.....

On second thoughts....

Nah - simply a crude PR stunt whilst their lawyers and tax experts find new, invisisble, tax loopholes.

Goldman Sachs backs down from delayed bonus tax plan

Bank decides not to proceed with scheme which would have allowed top staff to avoid 50% rate, as Mervyn King says bankers seeking to avoid tax is 'depressing'

Jill Treanor

guardian.co.uk, Tuesday 15 January 2013 15.26 GMT

Bank of England's Mervyn King at the Bank for International Settlements press conference in Basel, Switzerland. He has waded into the bank bonus row. Photograph: Patrick Straub/EPA


Goldman Sachs has backed down from proposals to defer bonuses to allow its top bankers to avoid the highest rate of tax in the face of criticism by Sir Mervyn King, governor of the Bank of England.

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

His comments at the Treasury select committee were made just as Goldman's compensation committee was meeting ahead of the bank's full-year results on Wednesday shortly after which bonuses will be announced to staff. The Goldman committee decided not to proceed with a plan it had been considering to defer parts of bonuses from 2009, 2010 and 2011 until after 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 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.

The government has faced criticism for refusing to intervene. 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 fresh 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 among the most generous 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.

David Hillman, a spokesman for the Robin Hood Tax campaign, which lobbies for a financial transaction tax, welcomed King's comments and urged the government to "get a grip" on the financial sector.

"Good on the governor for slapping the wrists of Goldman Sachs, but why is the government keeping schtum about a tax sleight of hand that will cost them (and us) millions?

"It's only the start of bonus season and already banks are stirring controversy with their disconnect from the rest of society it's time the government got a grip."