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Irish bailout bill passes

Associated Press Modified: January 29, 2011 at 2:31 pm •  Published: January 29, 2011

DUBLIN (AP) — The upper house of the Irish legislature has passed a contentious Finance Bill needed to comply with terms of a massive international bailout package for the country, Irish state television reported.

The Finance Bill is designed to comply with the terms of a European Union-International Monetary Fund loan, which is contingent on Ireland cutting €15 billion ($20.56 billion) from its deficit spending over the coming four years and the country imposing the harshest cuts this year.

The vote was 30-20, RTE said.

The bill's passage was expected. Prime Minister Brian Cowen has said he will seek dissolution of the legislature on Tuesday, setting the stage for a national election.

Cowen's Fianna Fail is expected to take a drubbing in that vote. His Fianna Fail has long dominated, but Cowen, who was Ireland's finance minister from 2004 to 2008, is widely blamed for Ireland's stunning slide from Celtic Tiger boom economy to the brink of bankruptcy.

The measure included a 90 percent tax on bonuses paid to employees of any of the Irish banks that needed state support to survive after a runaway property market collapsed.

The government proposed the tax in December following uproar over news that Allied Irish Bank, the beneficiary of a euro3.7 billion ($5.07 billion) bailout, was about to pay bonuses to more than 2,000 executives totaling euro40 million.

The government quickly dropped the idea, but it was revived on Wednesday to secure the votes of two independent legislators, Michael Lowry and Jackie Healy-Rae. That concession clinched passage of the bill in the lower house the following day.

The parliament has already approved cuts in welfare benefits, the minimum wage and salaries of Cabinet ministers, and it has raised school fees.

But the toughest measures — increasing income taxes across the 2 million-strong work force, raising effective tax levels to 41 percent or more — are in the Finance Bill.