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Ireland: Cutting pay for bank chiefs would mean higher taxes, says minister

12 November 2012   (0 Comments)
Posted by: SAIT Technical
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By Shaun Connolly (Irish Examiner)

Executive summary (SAIT Technical)

According to Irish Transport Minister Leo Varadkar, cutting the pay and pension packages of executives at bailed-out banks would result in a loss of incoming taxes. This could lead to spending cuts and general tax rises. Such executives pay very high taxes.

Full article

Slashing lucrative pay and pension packages for executives at bailed-out banks could trigger tax hikes and spending cuts, Transport Minister Leo Varadkar has warned.

As the row continued to rage over salary deals that leave six managers at the former Anglo Irish Bank on more than €500,000 a year, Mr Varadkar's intervention provoked anger, with Fianna Fáil branding it "perverse".

The minister insisted the executives at nationalised banks were not funded directly by taxpayers but were in the same position as semi-state employees.

Mr Varadkar said reducing their pay deals would mean needing to raise extra revenue in other ways — such as cuts to services or general tax rises.

"People on high pay and on high pensions who are not paid directly by the State pay very high taxes, so if those pensions or high pay are cut that will mean less taxes coming in and that will then have to be passed on in the form of higher income tax for others or cuts in spending," he told RTÉ.

The minister said he wanted the issue of large pay and pension deals "pursued with more vigour" but cautioned: "There are contractual rights that cannot be overturned, and secondly that these salary and pensions are not paid directly by the State, so that if they are cut it will mean fewer income taxes coming in and lower spending."

However, Mr Varadkar said the salaries at the former Anglo bank were too high and should be on a level with Nama.

Fianna Fáil's finance spokesman Michael McGrath condemned the minister's stance and insisted his party would table emergency legislation to try and force salary and pension cuts to bankers in the coming weeks.

"I think the minster's view is a bit perverse. These people are paid by public bodies and it is only right that there should be a reduction for the public good," said Mr McGrath.



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