Of all his insights over the years, including what he said two days ago in criticising certain bankers who were said to be planning to delay their bonuses until April 2013 (because the 50% tax rate on income over £150,000 gets reduced to 45% in April – see here) , its hard to find a more sensible voice.
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.
“In the long run, financial institutions… do depend on goodwill from the rest of society. They can’t just exist on their own.”
Not only is his long-suffering service toadmirable, he’s one of a very few who, in a sage-like manner speaks his mind while maintaining credibility, PC, common sense and taking responsibility of any errors of judgement on issues past.
In an interview with The Times last year, he said that the banks are still in denial about the “very real and wholly understandable” anger that is felt at their behaviour. Anger which is fuelled by such out of touch type of thinking as is the subject of this post. I mean, if you are earning £150k, why would you want to doctor your bonus, whatever amount that may be? Imagine trying to explain this to say a single parent juggling two jobs, or someone who despite working hard to get a job can’t find a full-time position:
Erm, the guys who are largely to blame for the credit crunch and the austerity we are now facing, some of whom were given funds to lend to businesses and individuals, but have proved to be somewhat reluctant to do so, are now tweaking the dates of their bonuses to pay 5% less tax. Oh and the average salary at one of those big banks, is now £280,000…
The chances are at £150K, you already have a lovely house / upmarket flat, or are on course to paying off your mortgage with relative ease; you or your family are relatively comfortable, nice cars, possibly several holidays a year, savings, private medical insurance, a relatively good diet, etc…whichever way you look at it, you are comfortable.
In response to the comments Sir Merving made, at least one investment bank seems to have come out and declared its position. Whether this is as a result of the criticism, we may never know.
But it would be good if such appearance of integrity/ honesty were more widespread among those in positions of authority.
- Mervyn King hits out at bonus deferrals (telegraph.co.uk)
- Just before we leave Savile the bogeyman . . . (thetimes.co.uk)
- UK News: Bank drops bonus ‘tax dodge’ delay (walesonline.co.uk)
- UK & World News: BoE boss slates bank bonus tax move (journallive.co.uk)
- Mervyn King attacks bankers who try to pay less tax on bonuses (guardian.co.uk)