Britain’s very modest surtax revenues

By Felix Salmon
December 10, 2009
Andrew Clavell notes something very interesting about the amount of money the UK Treasury expects to raise from its bonus tax:

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Andrew Clavell notes something very interesting about the amount of money the UK Treasury expects to raise from its bonus tax:

Given £6bn of bonuses originally expected to be paid to UK based bank employees, HM Treasury’s anticipation of proceeds from the 50% levy of only £550m says a lot about what the government supposes the banks’ reactions will be.

No, the reaction isn’t that they’ll suddenly decide to slash bonuses from £6 billion to £1.1 billion. Instead, they’ll find loopholes: most likely just deferring the payment of bonuses until after the supertax expires. At that point, the top tax bracket rises to 50% from 40%, so the government will still get a bit more money. But not nearly as much as the headline rate on the supertax implies.

Even so, the £550 million estimate does seem incredibly small: it implies total bonus pools this bonus season of just £1.1 billion. Can that really be the case?

4 comments

Comments are closed.