NO EMPLOYEES OF any financial institutions that were bailed out by the tax payer have been hit with a higher rate of Universal Social Charge (USC) since 2011.
Under Section 531 of the Taxes Consolidation Act 1997 a charge is permitted on bonus payment over €20,000 paid to employees of financial institutions that received financial support from the State under the Credit Institutions (Financial Support) Act 2008.
The measure was introduced to discourage inappropriate additional payments to employees of financial institutions who had been bailed out by the taxpayer.
Answering a parliamentary question from Fianna Fáil’s Michael McGrath on how many have been hit with the additional charge and whether it is still in place, the Minister for Finance Michael Noonan said the excess bank remuneration charge is incorporated into the Universal Social Charge.
“It applies in all respects as if it was USC except that it is charged at a higher rate of 45 per cent. The normal USC rates are not applied. The charge applies for 2011 and subsequent tax years, resulting in these bonus payments attracting an effective tax rate of 90 per cent,” he said.
He explained that the charge was introduced to discourage bonus payments to employees of financial institutions when their very existence is contingent on taxpayer support.
Noonan said the Revenue Commissioners informed him that 47 individuals were subject to the charge in 2011 while nobody came within the charge in 2012 or 2013.
Since the advent of the financial crisis, the citizens of Ireland have endured several years of austerity as we seek to put the public finances back on a sound footing and to restore the nation to prosperity.It would not be appropriate that well paid individuals, whose livelihood was ensured by sacrifices made by so many ordinary people, should benefit in the face of the challenges faced by the rest of society.
He added that it was “the unique circumstances” where some of these financial institutions wished to proceed to make bonus payments against the wishes of the then Minister for Finance that required the special legislation.