Lower city bonuses mean lower tax revenues

The Telegraph reports today:

"Alistair Darling could face a multi-billion pound tax shortfall in the coming year as the City's market misery takes its toll on bonuses and bank profits.

"The Treasury could miss out on as much as £2bn in tax revenues if the coming round of City bonuses disappoints, according to preliminary estimates by The Daily Telegraph and financial experts. The hit will be even worse if the current bout of instability persists for many more weeks, spelling deep trouble for the new Chancellor, analysts said. The news comes only days after it emerged that City bonuses hit a new peak of £14bn in the past year."

When politicians such as Peter Hain and other criticise the scale of City bonuses, they should remember just how much the Treasury receives in tax from these payouts.