Finance Bill passes by comfortable majority

SEANAD ÉIREANN will debate the Finance Bill today and tomorrow after the Dáil passed the controversial legislation by a comfortable 81 votes to 76.

The 228-page Bill with 79 sections and a further 28 pages of committee- and report-stage amendments gives effect to the measures in the Budget and will cut €6 billion from exchequer spending this year.

Yesterday may well have been the last sitting day of the 30th Dáil.

If the Bill is passed by the Seanad without any recommendations for change, the Dáil will not sit tomorrow at 8pm as scheduled, but return on Tuesday afternoon – unless Taoiseach Brian Cowen decides on a dissolution at the weekend.

One of the most anticipated amendments to the Finance Bill, introduced yesterday, relates to bonuses in the banks covered by the State guarantee, which will effectively be taxed at 90 per cent.

The two-page “excess bank remunerations charge” amendment means that any bonus of €20,000 or more will attract a 45 per cent universal social charge as well as the 41 per cent income tax and 4 per cent PRSI charge.

Minister for Finance Brian Lenihan stressed, however, that no bonus would be paid in future to any employee of the State-covered financial institutions and the amendment “simply copper-fastens” that.

Labour finance spokeswoman Joan Burton welcomed the measure but asked “if any Hercule Poirot or Miss Marple in the Department [of Finance] has found out what really happened to the Bank of Ireland bonuses. These have become one of the final mysteries of the 30th Dáil,” she said of the controversy surrounding undisclosed bonuses paid to employees.

Ms Burton said “the bonus culture is part of what destroyed our banks”.

Like tax breaks “the bonus culture gave rise to a climate of irrational greed in the country, where structures like banks – some of them a hundred years old – were turned around by their own actions and risk-taking because senior executives could make millions in annual pay through bonuses by selling products and ignoring risk”.

She said it was a welcome measure that the bonus tax would not apply below €20,000 because “many bank employees work in call centres and receive a low basic salary. As with salespeople, their basic pay can be as low as €10,000 or €15,000, with a bonus paid at the end of the year to bring their final salary up to the average industrial wage”.

Sinn Féin finance spokesman Pearse Doherty welcomed the amendment but said it was wrong to allow top bankers to receive bonuses of €20,000.

“This Bill will enable Anglo Irish Bank to pay out bonuses of €19,999 to all its officials tomorrow morning.” He said that sum was “twice as much as the 440,000 people in receipt of social welfare receive in a year”.

Mr Doherty also called for a stay of 60 days until an economic impact assessment was done on the effects of the universal social charge, which he said would “cost jobs”.

Welcoming the bank bonus amendment, Damien English (FG) warned that the next minister for finance “must give proper consideration to the Central Bank report on the payment structures of banks”. He said the governor of the Central Bank “is still concerned that there is a possibility of a repeat performance in some of our banks”.

Mr Lenihan rejected the Sinn Féin suggestion that bank executives could get a bonus of €20,000. “That is not true because those bonuses are not permitted under arrangements I have already put in place. The arguments about Bank of Ireland and AIB relate to retrospective issues.”