FG calls for €40m in AIB bonuses to be deferred

FINE GAEL has called on the Government to defer payment of the €40 million in bank bonuses to AIB senior bankers until an expert group can be established to ensure the taxpayer does not have to pay.

Party deputy leader Dr James Reilly urged the Government to “have the political courage” to do this because paying the bonuses was “unjust, wrong and unfair. It infuriates people”. He pointed out that there were legal ways to avoid the payments.

“Bonuses are paid in December and not earned until that month. One could be performing wonderfully well until September and make a hames of matters in October and November”.

He said the financial guarantee of September 2008 brought legislation that prevented payment of bonuses to senior bank staff. Dr Reilly said “there is law, and sometimes there can be legal niceties and legal difficulties, but where there is a will there is a way. That way should be sought and taken.”

Minister for Finance Brian Lenihan insisted that “any attempt to single out a group of income taxpayers for penal treatment in a retrospective way would of course be entirely impossible”.

He said the employees were legally entitled to their bonuses. He welcomed the clarification by AIB’s new executive chairman that the payments “reflected the past – before 2008 – and that this was not the way the bank intended to conduct itself in the future”.

When Michael D Higgins (Labour) asked: “what does that mean”, Mr Lenihan retorted: “What it means is that they went to the High Court and tried to contest them and were legally upheld.” He stressed that the bonuses would be taxed at the highest income tax rate. There were no bonuses paid for 2008 and 2009 and he repeated that in future a 90 per cent tax would be charged on any bank bonus.

Joe Costello (Labour) said: “There is a Christmas bonus for the executives, but a cold shoulder for wholly innocent frontline staff.” Mr Costello repeated the call for an amendment to tax the AIB bonuses at 90 per cent and criticised the Minister’s response as being “like Saint Augustine, it will happen but not yet. It will happen in the future”. The amendment would be “in keeping with its title of emergency measures in the public interest. Surely this is an emergency measure in the public interest”.

Labour finance spokeswoman Joan Burton described the Minister’s insistence that he could not tax the bonuses at 90 per cent as a “pathetic defence”.

She did not believe this to be the case in tax law because teachers and lecturers marking exam papers and doctors and lawyers “are paid a fee the years after they supply the service” and the fees were “generally taxed at the current year’s tax rates, especially if the person is in employment as opposed to being self-employed”.

She said the Government “was not able to increase in the 2010 tax year the taxation of bonuses to a current year basis” when “any tax lawyer is able to do as much”.