Joan Burton (Dublin West, Labour) | Oireachtas source

I raised this issue at a meeting of the Committee on Budgetary Oversight and I am grateful to the Revenue Commissioners for the figures they supplied on it. The Minister is correct that every country in the world has a regime in place for dealing with business losses. The issue is that institutions that return to strong profitability are being allowed, as a consequence of built-up losses in the system, to opt out of making a contribution to taxation. This is wrong, particularly in the case of Ireland, given that we have such a large built-up need for capital investment, as we discussed yesterday and earlier today.

Some years ago, the Minister for Finance at the time, the late Brian Lenihan, and one of his predecessors in that office and a former Taoiseach, Mr. Brian Cowen, agreed with me that the same circumstances which applied to high income earners at the time were a scandal. As a result, they agreed to introduce a regime of minimum effective tax rates, similar to those in operation in many other countries. Under this model, if a person has built up losses, he or she must contribute to taxation once profits exceed a significant level. We have this formula in place for income tax and I am pleased that the Minister has maintained the model because it was the subject of much debate in the period after the crash. This approach has served the country well.

We all want financial institutions to be viable and provide credit. I fully concur with the Minister on that point. However, in the context of a housing crisis in which construction companies and development firms have built up large losses, it is a mistake to allow the banks to effectively make no contribution when they return to significant profitability. This does not address the country's needs. While everyone recognises that losses are a particular feature of business and addressed in taxation systems, one cannot have circumstances in which banks begin to earn €200 million, €300 million or €500 million per annum without making a contribution because there are accumulated losses in the system.

While it is not easy to address this issue, the various requests made by members should at least be examined. We should learn more about the issue and work out a strategy for addressing it. I am aware that the Minister does not favour hypothecating taxes, but some of these contributions should be directed into capital investment in third level education, an underfunded sector that has much catching up to do. That would be an investment in the future economic sustainability of the country. The details could be worked out. The Minister should not simply reject our proposals.

I worked in business for a long time. One can conduct comparative studies of different tax regimes, but the Minister's two immediate predecessors correctly saw fit to accept the principle we have outlined in respect of people with very high incomes who had available to them a large number of tax shelters. A report in the Dáil showed that many of those on incomes in excess of €1 million per annum effectively paid no tax. We finessed the tax code by introducing the concept of a minimum effective income tax rate and the Minister maintained this model. As I stated previously, including during the debate on Apple, we should introduce a minimum effective tax rate for companies. This issue was discussed in the debate on Apple and the tax treatment of some multinational companies. We need to ensure individuals with strong incomes are contributors to the taxation system. Equally, in the corporate sector, notwithstanding that it is technically more difficult to achieve, we should ensure profitable corporations with significant current profits are not able to avoid making a contribution to the economy through corporation tax.