Lenihan: I won’t put supertax on bankers’ bonuses

THE Government says it has no intention of introducing a “supertax” on bankers’ bonuses similar to that adopted by Britain.

Earlier this month, British exchequer chancellor Alistair Darling announced a 50% tax on bankers’ bonuses over £25,000.

The tax is scheduled to kick in from next April, and will be paid by the banks rather than individual staff.

The plan has met with both praise and criticism, with some claiming it is a welcome move to tackle the sector’s excessive remuneration structure and others arguing it will result in a flight of senior bankers from London.

Whatever the case, the Department of Finance says there are no intentions of introducing a similar supertax here.

In a written answer to a recent parliamentary question from Labour’s Mary Upton, Finance Minister Brian Lenihan said he was aware of the British plan and “also cognisant that other countries have signalled their interest” in introducing similar provisions.

“However, I have no plans to introduce such measures here at this time,” he stressed.

“Where banks have received state support in the form of guarantee or recapitalisation, this has been conditional on restrictions on top level pay and bonuses,” Mr Lenihan added.

“The question of how to regulate the financial system to prevent future crises is being actively debated in the EU and elsewhere.

“We will update our regulatory and other systems in line with best international practice at the appropriate time.”

In return for state recapitalisation earlier this year, AIB and Bank of Ireland agreed that no bonuses would be paid to senior executives.

Similarly, any bank covered under the state guarantee scheme is severely restricted in the bonuses that they can provide to senior executives.

But this does not translate into a blanket ban on bonuses in the sector.

And some fear the generous bonus culture will simply re-emerge once the banks begin to recover.

Ms Upton is arguing that measures such as a supertax should be in place to prevent the excessiveness of the past.

Describing Mr Lenihan’s refusal to introduce the supertax as “very disappointing”, she said: “The prospect that bankers may now once again be in line for bonuses is beyond comprehension to most right-thinking people, and whatever ‘restrictions’ the Fianna Fáil Government has put in place are inadequate.”