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Future bankers' bonuses to be hit with 90 per cent tax

Amendment to Finance Bill will bring in levy but it will not apply to the deferred 2008 payments of €40m to AIB senior staff.

Image: Jim G via Flickr

BANKERS WILL HAVE any future bonuses paid to them slapped with a 90 per cent tax – but the levy won’t apply to the 2008 bonuses being paid to AIB staff.

Minister for Finance Brian Lenihan announced the tax last night, the Irish Times reports. He says he will amend the Finance Bill to include the 90 per cent tax when it goes up for debate in January.

However, this levy will not apply to the €40m being paid to 2,400 AIB ‘key staff’, as these are payments being deferred from 2008 and the tax laws that existed in 2008 apply. The legislation cannot be retrospective, tax lawyer Suzanne Kelly told RTE’s Morning Ireland today.

Minister Lenihan said that legislation already prevented the payment of performance-related bonuses to senior bankers – and none had been paid for 2009 and 2010 performance. He said the amendment to the Finance Bill would give effect to taxing any future bonuses:

This should copperfasten this matter, and put it beyond any doubt whatsoever.

David Hodgkinson, executive chairman of AIB, told staff in a memo yesterday that the €40m bonuses to execs are a thing of the pat. He said that the cheques will be posted to the senior bankers on December 17 but that this is what was “legally required” of the bank. He said: “It reflects the past and is not the way we intend to conduct ourselves in future.”

Fine Gael TD James Reilly called for a 99 per cent tax to be applied to bankers’ bonuses in the Dail yesterday. His call was backed by Fianna Fail backbencher Chris Andrews. As reported in TheJournal.ie yesterday, a question about bank bonuses Mr Andrews posed in the Dail last week revealed that Anglo Irish Bank employees up to managerial level received a 5 per cent general pay increase last year. Five bankers there also received bonuses this year, which they say were deferred payments from “previous years”.

Larry Broderick of the bank workers’ union IBOA told Morning Ireland today that his union members were frontline staff, and not the recipient of bonuses. However, they had been the ones feeling the public’s anger and he asked that they not be the subject of ridicule because of payments made to people in jobs senior to them.

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