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King attacks prospect of tax avoidance bank bonus delay Goldman Sachs not to delay bonus payments
(about 2 hours later)
Sir Mervyn King has criticised the prospect of investment bankers choosing to defer their annual bonuses until after the introduction of the new lower top rate of income tax. Investment bank Goldman Sachs will not delay annual staff bonus payments to take advantage of a forthcoming fall in the top rate of income tax, the BBC understands.
The Bank of England governor said such a move would be "depressing" and against the needs of wider society. The decision comes after Goldman and its rivals had faced criticism after reports said they were planning to delay bonuses until after 6 April, when the 50 pence top tax rate falls to 45p.
His comments follow reports that a number of banks are planning to delay bonus payments until after 6 April. Sir Mervyn King was one high profile critic of the suggested postponement.
This is the date when the 50 pence top rate of income tax falls to 45p. He said it would be "depressing".
Sir Mervyn's comments were given to the Treasury Committee of MPs, who questioned him on the matter. The Bank of England governor made his comments earlier on Tuesday before the Treasury Committee of MPs.
He said: "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... knowing that this must have an impact on the rest of society, when even now it is the rest of society which is suffering most from the consequences of the crisis. He added that any delay by the investment banks would be against the needs of wider society.
Sir Mervyn said: "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... knowing that this must have an impact on the rest of society, when even now it is the rest of society which is suffering most from the consequences of the crisis.
"I don't know what will happen, and they haven't made any statement, but I think it will be clumsy and lacking in care and attention to how other people might react."I don't know what will happen, and they haven't made any statement, but I think it will be clumsy and lacking in care and attention to how other people might react.
"In the long run, financial institutions... do depend on goodwill from the rest of society. They can't just exist on their own.""In the long run, financial institutions... do depend on goodwill from the rest of society. They can't just exist on their own."
Sir Mervyn added that it would not be "unlawful" for the banks to defer their bonus payments.Sir Mervyn added that it would not be "unlawful" for the banks to defer their bonus payments.