So even the tin ears in the City are now railing against excessive pay at the top. A study by Share Centre found that 95% of institutional investors now believe pay is too high across all leading companies, not just the banks. Very observant of them. The real question is what should be done about it which will bring stratospheric reward packages down to the real world of fair pay and prolonged austerity. Here is a 9 point plan:
- HMRC should, as I proposed yesterday, publish the tax returns annually of all persons paid over £150,000 a year (£2,000 a week). The transparency would go no little way to pulling down pay levels and discouraging tax avoidance.
- All medium or large organisations should have an annual meeting of the company Enterprise Council for representatives of all the main grades in the organisation, from the boardroom to the shop floor, at which after reviewing the state of the company’s books the next year’s pay at all levels should be agreed.
- A High Pay Commission would establish broad pay guidelines especially for top pay and issue them for public consultation and modification in the light of public debate, so that they are seen to command widespread national support.
- Where for any company unresolved differences remain about the appropriate level of reward payable, those matters would be referred to the High Pay Commission which would examine how far the proposals fell outside the pay guidelines issued, and if so, how far taking account of the particular circumstances that might or might not be justified. Where it was found not to be justified, the pay proposal would fall.
- A General Anti-Tax Avoidance Principle should be introduced, and after debate about its precise drafting it should be passed into law.
- Any person thereafter making a pay disposition which fell foul of the GANTIP rule would have that disposition declared null and void by the tax authorities and be penalised for attempted tax avoidance by a penalty amounting to perhaps twice the sum involved.
- Any tax accountants or lawyers found to have promoted or sold such a scheme that breached the GANTIP rule would be similarly penalised.
- International agreement should be sought that all goods and services sold should be taxed at the point where they were created, thus not permitting transfer pricing to low-tax jurisdictions.
- All transactions with tax havens (i.e. those where international standards of transparency were not applied) would be deemed illegal and subject to seizure.