Complex plan for 90pc bank bonus tax shelved
Published 25/01/2011 | 05:00
PLANS to tax bankers' bonuses at 90pc have been shelved, the Irish Independent has learned.
The measure to hit bank bonuses will not now be enshrined in the Finance Bill as it is rammed through the Oireachtas in the coming days.
Last week Minister for Finance Brian Lenihan promised that curbs on bank bonuses would be added to the "later stages'' of the Finance Bill 2011, but with time to debate the bill now so short, this plan has been scrapped, leaving the whole area of banker's bonuses up in the air.
More than 2,000 AIB staff are still due to be paid bonuses for work done in 2008, but the bank is holding off on payment pending final instructions from the government of the day.
Mr Lenihan was going to tax the bonuses at 90pc, wiping out most of their value, but this plan was legally complex and has now been scrapped.
It means the controversial issue of bank bonuses, due to be paid at AIB, has been handed over to the next government.
AIB in the meantime will not be paying them, but it is facing fresh legal challenge from some members of AIB Capital Markets, where most of the bonuses arise.
The tax implications of civil partnerships, also expected to be included in the Finance Bill, have also been jettisoned for time reasons.
Meanwhile, there are considerable clouds over other elements of bank policy as the current government bows out. The NAMA (Amendment) Bill is also not going to make it through the Oireachtas in the current session, throwing a major spanner in the works for Irish banks.
This bill would have allowed NAMA to take over property loans valued at less than €20m and help the banks to shrink their balance sheets, making them more attractive to outside investors. Ireland has signed up to a range of milestones with the IMF and EU in relation to banks and one of the key ones is to order the recapitalisation of AIB, Bank of Ireland and EBS by the end of February. This now looks like an ambitious target.
Mr Lenihan is also awaiting answers from Bank of Ireland on its bonus structure and payments.
Recently its chief executive Richie Boucher admitted the bank provided incorrect information and since then it has had to correct the record.