Goldman Sachs, the latest victims of opportunistic MPs
Shall I tell you what is really “depressing”, Sir Mervyn King? That Goldman Sachs has now abandoned its plans to delay payouts of bonuses for some of its UK staff following intense and misguided pressure from a group of politicians and their flunkies.
Yesterday, House of Commons Treasury Committee member, Teresa Pearce, asked Sir Mervyn, the Bank of England Governor, if he thought that deferring bonuses to take advantage of a forthcoming lower tax rate was “ordinary tax planning or… morally repugnant.”
He swerved the question by saying: “I find it a bit depressing that people who earn so much seem to think it is even more exciting to adjust the timing of it to get the benefit of a lower tax rate.”
His comments followed earlier reports that suggested that Goldman Sachs was considering delaying bonuses until after 6th April to take advantage of the cut in the income tax rate to 45p, announced by Chancellor George Osborne in last year’s budget.
Goldman Sachs bosses have now confirmed that they have scrapped such plans.
I find it “depressing” that people such as Sir Mervyn and Ms Pearce think it is odd that firms and individuals would actively seek completely legal ways of mitigating their tax burdens.
Why on earth would Goldman Sachs, for instance, make their staff pay another five per cent tax when they are not required to by law?
What Goldman Sachs was planning to do was, unquestionably, within current tax laws, yet it has become the latest high-profile firm to be publicly bullied into handing over more tax than it legally has to by a group of opportunistic MPs who see this issue as a ‘vote-winner.’
Starbucks, as you will remember, last year voluntarily agreed to pay an extra £20m in corporation tax after its executives were lambasted by politicians on the Public Accounts Committee.
At the time the coffee giant signalled it would pay more tax than it needed to, after a committee of MPs, on a whim, hauled its executives over the coals, I warned that it was setting a “dangerous precedent.”
We cannot have a tax system which is based on ‘donations’. Companies and individuals should pay precisely the tax they are required to – and no more. Tax, after all, is a legal impost, not a philanthropic act.
Goldman Sachs, and Starbucks, were following the law. If MPs feel the laws are ineffective, then they are the ones who have the power to draft new ones.
And until laws are broken, politicians should allow firms to conduct their tax affairs as they see fit.