The head of Goldman Sachs has warned David Cameron against “criminalising” businesses in a crackdown on tax avoidance.
The Prime Minister said on Thursday 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 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.
Chief executives at more than 30 of Britain’s biggest companies have warned against publishing more details of their tax affairs.
Goldman Sachs chief executive Lloyd Blankfein said 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 a forthcoming cut in the top rate of income tax from 50p to 45p. The bank decided not to go ahead with the scheme.
Mr Blankfein said: “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.”
More than half – 32 out of 52 – of FTSE 100 bosses who responded to a survey by Conservative MP Stephen McPartland reportedly raised concerns.
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, said: “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.”
Mr Cameron’s official spokesman defended the Prime Minister’s comments yesterday.
He said: “The point the Prime Minister was making was that there is nothing anti-business about businesses paying the right amount of tax.”