AIB staff escape 90% super tax on bank bonuses
Finance Minister Brian Lenihan announced the new super tax last night, following outrage at the bonuses being paid to 2,400 AIB employees. His announcement followed a Fine Gael demand for a 99% super tax and for it to be applied to the AIB bonuses.
Fine Gael deputy leader James Reilly said it was “outrageous” a bank being bailed out by taxpayers would be paying the bonuses, which work out at an average €16,700 per recipient. However, Mr Lenihan told the Dáil last night that while he would introduce a 90% super tax, it would be “prospective rather than retrospective”.
The AIB bonuses were owed in respect of work performed prior to 2008 and the introduction of the bank guarantee scheme. “The legislation introduced on foot of the state guarantee prohibits the payment of performance bonuses to senior executives, and this continues to be the case.”
Mr Lenihan said AIB’s executive chairman, David Hodgkinson, “has clarified that the payments relate to a culture in AIB which he believes belongs to the past and will not relate to the future of the bank”.
The payout at AIB is a result of trader John Foy’s successful legal action against the bank, which resulted in it having to pay him a deferred bonus of €161,000. The ruling has prompted AIB to pay all the outstanding bonuses.
The European Commission said it could not interfere in the issue, given the High Court ruling.
Competition spokesperson Amelia Torres added: “If the bank had decided this itself, it would be bizarre. But it has been a decision of the Irish High Court; there is a big difference.”
With AIB having been almost completely nationalised, a new restructuring plan for the bank will have to be submitted to Brussels for approval. Ms Torres said the commission would consider the remuneration policy of the bank as part of that. “In particular we will want to make sure that the remuneration policy as such does not lead to excessive risks or excessive leveraging by the bank.”
Mr Lenihan announced the super tax as an addition to the Finance Bill introduced in the Dáil last night to give effect to the cuts to the minimum wage, ministerial pay and public service pensions. The bill will be passed in the Dáil today.
Yesterday, the Government majority ensured passage of the social welfare bill to cut most welfare payments by €8 a week from January 1.
