* Goldman scraps plan to exploit lower UK tax - source
* Mervyn King says Goldman plan was "depressing"
* King warns plan risked stoking public anger during crisis
By Huw Jones
LONDON, Jan 15 Goldman Sachs has scrapped
plans to delay paying bonuses to its bankers in Britain to
exploit an income tax cut for top earners after Bank of England
Governor Mervyn King criticised the move.
Earlier on Tuesday, King chided the U.S. investment bank for
considering a delay in bonuses until after April 6 when the top
tax rate falls to 45 percent from 50 percent.
"The delay had been under consideration and the decision was
made today not to do it," a person familiar with the situation
Goldman Sachs declined to comment.
King's intervention ratcheted up the pressure on Goldman,
which sparked a furore last week when the bank's plan emerged.
"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," King told a
panel of British lawmakers when asked about Goldman's plan.
The head of the central bank said that while Goldman's plan
was not unlawful, the tax reduction was being done at a time
when the rest of society was suffering from the consequences of
the global financial crisis.
Britain had to shore up and nationalise banks during the
2007-09 crisis, which has sparked public anger over bonuses at a
time when the government is freezing public pay and cutting
Finance minister George Osborne, who introduced the
reduction to the top rate of tax, has come under pressure from
campaigners to prevent banks such as Goldman from avoiding tax
by delaying their bonuses.
King, who has a salary of 305,000 pounds ($490,000) a year,
told parliament's Treasury Select Committee it was "clumsy" to
pay bonuses in such a way and betrayed a lack of attention to
how others might feel.
"And in the long run, financial institutions, like all large
institutions, do depend on goodwill and the rest of society.
They can't just exist on their own," King said.
Goldman's plan touched on two sensitive issues that have
triggered public anger in Britain: the size of bankers' bonuses
and why large international firms like Starbucks and
Amazon have been able to pay so little UK tax in recent
The Goldman bonuses in question were deferred from 2009 to
2011, a person familiar with the bank's operations told Reuters
The bank recently brought forward payments of deferred stock
to executives in the United States to 2012 to beat tax hikes
implemented for top earners this year.
"Political pressure in this area is likely
to grow. Already the Labour opposition has attacked the
government for giving Goldman an opportunity to reduce taxes
on bonuses," UK shareholder advisory firm PIRC said in a note on