The Irish government's plans to tax bankers' bonuses at 90% have been scrapped in a move to get its critical finance bill onto the statute books before parliament is dissolved for a general election.

Finance minister, Brian Lenihan, announced at lunchtime today that the "banks' bonus surcharge may be difficult to do" by Friday, when the finance bill is expected to be ratified by the Dáil.

The tax was announced by Lenihan in December after it emerged that the stricken Allied Irish Banks was due to pay €40m (£35m) in bonuses to executives.

A spokeswoman for the minister said: "It is not possible with the new regulatory timetable. The finance bill and all the various proposals would have been run by the attorney general who would have to ensure that the legislation was appropriate."

The decision to scrap the bonus will enrage the opposition. Independent TD Michael Lowry has already said he is unhappy that it is not being included.

The new tax was not going to apply to AIB but executives' bonuses were cancelled by the bank's board after Brian Lenihan made Ireland's bailout conditional on the bonuses not being paid.

Lenihan reassured an angry public last December that the new tax would "copperfasten this matter, and put it beyond any doubt whatsoever,"

The bank was in effect nationalised on December 23 when the government pumped another €3.7bn of taxpayers into is coffers to boost its capital reserves.

A number of staff from AIB Capital Markets, where most of the bonuses arose, lodged a legal challenge to this and the issue of the bonuses will now be left to the new government.

Also left off the bill in an effort to rush it through and enable a general election on February 25 are proposals to harmonise the tax rules applying to civil partnerships.

But Lenihan has put through other amendments aimed at helping the needy and ensuring high-earning self-employed people pay their share of the budget taxes announced last December.

Efforts to wipe out banking bonuses with the 90% tax were popular with voters and with critics of the banking bonus culture.

This month the minister had to admit that he had been misled by the Bank of Ireland on the size of some of the bonuses and the bank is now under investigation.

As the Irish government conceded that the crackdown on bankers' pay would need to shelved, a survey in London found little evidence of pay restraint in the City.

The survey by eFinancialcareers.com found that 39% of bankers and financiers had been handed a 5% bonus increase this year in the City, in contrast to the US where the survey found that average bonuses were down 5%.

