Bankers bonuses

A new EU law caps bonuses banks can pay to twice their salary.

George Osborne says this is more evidence of EU government failure. And you can write about it in essays as government failure resulting from information failure with unintended consequences.

Think about this ..... There is no limit on salary increases so if  a bonus cap is double, then a higher salary means a bigger bonus can paid. Eurocrats missed this one.

From the Chancellors view point a worst case scenario is that banks increase salaries as reward to bankers not bonuses. Bankers bonuses have a special higher tax applied to them. Higher than the income tax bankers will pay on increased salaries. So the government could suffer a loss of tax revenue!