Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I have very little to add to my initial speaking note which I read into the record. The motivation for the change in 2013 arose from CRD 4 and the new capital rules for banks under Basel III. Up to then, it was possible to continue to use potential losses in a bank in calculating the off-setting arrangements against tax liability as part of tier 1 capital. When the change took place, it was in ease of the taxpayer that I removed the 50%. If we had not done it this way, we would have had to put extra capital into the banks at that time. The extra capital would have had to be taken from either borrowing or Exchequer funds.

It is not that the banks will pay less over time. Everyone knows that recovering the Irish banks is a long term rather than a short-term game. They will pay the same amount of tax over time but there is an advantage in doing what we did in 2013 in terms of making provision for the capital required for the banks under the Basel III arrangements. That was one of the key factors at the time. I also took on board the arguments being put forward now by Deputy Doherty and others. These arguments were put forward at the time as well. I took them on board so that the banks would make a contribution to remediate the crisis they were significantly responsible for causing. Rather subjecting them to the normal corporation tax regime, we introduced a levy system of €150 million a year from the banking sector. I announced on budget day that we were extending in the Finance Bill the €150 million per annum levy to 2021. That guarantees a tax take of an additional €750 million. I also said the calculation of this would have to be changed because it adversely affected foreign banks. We need better targeting in that regard. It was related to the amount of DIRT paid by banks as well. We know what has happened with the lower percentages on DIRT and the amount of DIRT paid. There is a change in the methodology, but the net result is the same; the banks will pay €750 million in levies over the five year period 2017 to 2021.