Brian Lenihan Jnr (Dublin West, Fianna Fail)

On Report Stage in the other House an amendment was introduced to provide for an aggregate charge of 90% to be applied to bonuses paid by certain financial institutions to their staff. The amendment applies a high rate of universal social charge to any payment in excess of regular salary made by a financial institution which has received financial investment from the State to any of its employees. The charge will also apply to benefits given in lieu of cash. The charge will be a universal social charge rate of 45% which, together with an income tax rate of 41% and a PRSI rate of 4%, gives an aggregate tax rate of 90% on these bonus payments. It will not be applied to bonuses to employees to whom no more than €20,000 in remuneration is awarded in a tax year. This is being done to reflect the remuneration packages available to some low to medium paid staff such as those working in call centres where there is a fixed basic salary supplemented by a performance related element which can make up as much as 50% to 60% of basic salary, rather like the insurance salesman of old. As such, this level of €20,000 is a reasonable measure to ensure such staff do not lose out.

On another point, I do not regard it as appropriate for the boards of State companies, commercial and non-commercial, to be approving bonus payments for their chief executive officers.