British taxpayers look set to suffer from the £10bn of writedowns, as a result of global credit turmoil, unveiled in recent weeks by Royal Bank of Scotland, Lloyds TSB and HBOS.

The banks will knock more than £2.5bn off their combined tax bills and, though some losses will be booked outside the UK, the majority is expected to come at the expense of the British taxpayers.

The figure, which represents more than 5 per cent of the Treasury’s forecast for corporation tax receipts in the 2007-08 fiscal year, underscores the dependence of the public finances on the banking industry, which has accounted for a growing proportion of the tax base in recent years.

In 2005-06, the banking, insurance and finance sectors paid £11.6bn of corporation tax, around a quarter of the total.

In the US, the credit turmoil has shown a 13.6 per cent drop in corporate tax receipts totaling $173bn since the start of the fiscal year in October, according to the Congressional Budget office. Receipts amounted to $201bn during the same period last year.

That being said, the $28bn shortfall could be drowned out by the impact of the $150bn fiscal stimulus package designed to prop up the economy later this year. The stimulus is the main reason for projections that the US budget deficit is likely to double to $400bn this year.

A true indication of the damage suffered by UK banks from the market turmoil will be highlighted this week when HSBC and Barclays, the country’s largest and third-largest banks, respectively, announce their first quarter results. Analysts expect Barclays to announce writedowns of £1.4bn before tax.

Public finances will be affected in a number of other ways. Job losses and lower bonuses in the city of London may lead to lower income tax receipts, while fewer housing deals and lower house prices could undermine the amount raised by stamp duty.

The impact of the banks’ losses is particularly significant because all witedowns, even if the losses do not affect banks’ reported profits, have an effect on banks tax bills.

The treasury has said it had taken account for possible losses from the global credit turmoil in last autumn’s pre-Budget report. It did not adjust the forecasts, which predict corporation tax receipts of £47bn for the 2007-08 tax year.