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Irish Finance Minister Brian Lenihan answers reporters' questions at the end of a European Union finance ministers meeting at the European Union Council in Brussels on Nov. 28, 2010. (THIERRY ROGE/Thierry Roge/Reuters)
Irish Finance Minister Brian Lenihan answers reporters' questions at the end of a European Union finance ministers meeting at the European Union Council in Brussels on Nov. 28, 2010. (THIERRY ROGE/Thierry Roge/Reuters)

Ireland proposes 90% bank bonus tax Add to ...

Irish Finance Minister Brian Lenihan said on Thursday he would impose a 90 per cent tax on bankers' bonuses, in a move to try to silence critics who have said the banking sector drove Ireland into the ground.

"As far as the future is concerned I do propose to introduce the amendment to the finance bill to put this matter beyond any doubt and provide a high rate, a 90 per cent rate of charge on any ... bankers' bonuses," Mr. Lenihan told local radio.

Mr. Lenihan was referring to a bill that is the fourth in the series of a vote on the budget, which is expected to be ruled on in parliament early next year.

The Irish Independent reported on Thursday that Allied Irish Bank would pay out €40-million in bonuses to its executives.

Local media said that would not be subject to Mr. Lenihan's proposed charge since the bonuses were for work done in 2008. Once the state's largest listed lender, Allied Irish is facing a majority state ownership due to additional capital requirements.

The opposition centre-right Fine Gael party, which is likely to lead the next coalition government after an election next year, said a tax should apply to the Allied Irish bonus.

"We want them taxed at 99 per cent because we believe it's immoral to use taxpayers' money that was used to bail out the banks to pay bonuses," Fine Gael deputy leader James Reilly told Irish television.

"Let me make this clear, they're entitled to be paid it, we're entitled to tax it," he said.

The former chief executive of Irish Nationwide Building Society, Michael Fingleton retired a year ago with a controversial €1-million bonus, and former executives at collapsed Anglo Irish Bank have become hate figures in the media.

Ireland passed the second in a series of votes on the budget on Thursday. Once all the resolutions underpinning the budget have passed early next year, unpopular Prime Minister Brian Cowen is expected to call an election that he is widely expected to lose.

Opposition parties have harshly criticized the government for mismanaging the economy. Both Fine Gael and Labour want investors who lent money to Irish banks to share in the costs of the bailout instead of foisting all the burden on taxpayers.

Ireland's central bank told lenders earlier this month to overhaul pay practices and link bonuses to sound risk management or face fines and disqualification for individual executives.

 

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