Minister for Finance Paschal Donohoe has insisted an 89 per cent super tax on bonuses of more than €20,000 in bailed-out Irish lenders should remain enshrined in law, even as he moved to lift a ban on bonuses up to that threshold for the first time since the financial crash.
The Minister also said he “absolutely understands the sensitivity” of Government decisions on Tuesday to allow bonuses again and put banks on a path to escape executive pay caps, given the scale of the banking crash and as households are dealing with the cost-of-living crisis.
The move, on foot of a recommendation in the banking review carried out by his department over the past 12 months, was met with criticism from Opposition figures in the Dáil – as well a Coalition party TD.
However, Mr Donohoe said he wants “good people” in the banks at a time when they are struggling to attract and retain key staff in the face of competition from companies that are not subject to restrictions.
“I believe steps that are not recommended in this report are not ones the Government should implement – and that includes the 89 per cent super tax,” said Mr Donohoe.
He was referring to a tax that was set in law in 2011, during the financial crisis.
Mr Donohoe said he is removing executive pay restrictions at Bank of Ireland, after it sold its remaining shares in the lender in September and said the Government will lift an ongoing €500,000 pay cap at AIB and Permanent TSB, once taxpayers’ stake falls to what are unspecified “appropriate levels”.
Neasa Hourigan, the Green Party TD for Dublin Central and the party’s finance spokeswoman who recently regained the party whip after six months outside the parliamentary party for voting against the Government, said the move “is a significant mistake by this Government.”
Rural Independent TD Mattie McGrath accused the Coalition in the Dáil of giving “two fingers” to ordinary people and paying bonuses “to the fat cats in the banks”.
Earlier, there were sharp exchanges between Taoiseach Micheál Martin and Sinn Féin leader Mary Lou McDonald.
She said “it would be a bad call at any time but there is something really twisted about allowing big pay hikes for wealthy bankers by workers and families endure an unprecedented cost-of-living crisis”.
