Head of Goldman Sachs warns David Cameron on tax - UK Politics - UK - The Independent

Head of Goldman Sachs warns David Cameron on tax

 

The head of Goldman Sachs has cautioned politicians against subjecting companies to public opprobrium for responding to incentives in the tax system.

Prime Minister David Cameron spoke out yesterday against some forms of "aggressive" tax avoidance and said he would use Britain's presidency of the G8 to ensure that individuals and businesses "pay their fair share" and to push for greater global transparency about the ownership of companies and the movement of assets.

In an apparent swipe at cafe chain Starbucks, whose failure to pay corporation tax in the UK over three years sparked widespread outrage, Mr Cameron said that it was time for businesses to "wake up and smell the coffee" about public anger at tax-avoidance practices, which in some cases raised ethical issues.

But chief executives at more than 30 of Britain's biggest companies have warned against publishing more details of their tax affairs, according to the Daily Telegraph.

And Goldman Sachs chief executive Lloyd Blankfein said that holding people up for criticism for their tax arrangements risked "criminalising every right-thinking person who organises his or her affairs in a sensible way".

Goldman Sachs came under fire earlier this month for considering deferring bonus payments to allow staff to benefit from the forthcoming cut in the top rate of income tax from 50p to 45p. The bank decided later not to go ahead with the scheme.

Mr Blankfein told BBC Radio 4's Today programme: "If all of a sudden, in addition to the rules that generate certainty for people, the signposts become so amorphous and so loose and so subject to second-guessing, you're making everything uncertain and it's very hard to organise your affairs in a sensible way.

"I'm not saying that you are exculpated from any pressure merely because you meet the rule of law - we've never said that, we don't live that life.

"But I would say 'Are you going to hold people up to public opprobrium because a house they could have sold in January instead they sell in May because there was a profit to be made on that house because the selling price was higher than the purchase price?'.

"If you do that, you are going to criminalise every right-thinking person who organises his or her affairs in a sensible way."

Explaining Goldman's decision not to go ahead with the bonus deferral plan, Mr Blankfein said: "We are a public entity, we live on the goodwill of the public, and so we adapted to what we perceived as criticism. We stand by our original idea and we stand by the revision of our plans."

Announcing his plans for the G8 to "drive a more serious debate on tax evasion and avoidance", Mr Cameron told the World Economic Forum in Davos, Switzerland, yesterday: "This is an issue whose time has come. After years of abuse, people across the planet are calling for more action and, most importantly, there is gathering political will to actually do something about it.

"There's nothing wrong with sensible tax planning, and there are some things governments want people to do that reduce tax bills, such as investing in pensions, start-up businesses or charities.

"But some forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues and it's time to call for more responsibility and for governments to act accordingly."

But the Daily Telegraph reported that more than half - 32 out of 52 - of FTSE 100 bosses who responded to a survey by Conservative MP Stephen McPartland raised concerns about the issue.

Andrew Bonfield, finance director of National Grid and chairman of the tax committee of the Hundred Group, which represents finance directors in the FTSE 100, told the paper: "Transparency standards need to be developed, applied and enforced on a global basis to avoid the risk of regulatory arbitrage which will almost certainly disadvantage UK and EU companies."

And Deirdre Mahlan, chief financial officer of drinks company Diageo, warned that an international standard would "not only be hugely burdensome, but also potentially misleading" while Douglas Hurt, finance director of engineering firm IMI, feared innocent firms would be punished because of "the alleged abuses by a few", according to the Daily Telegraph.

PA

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