Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I am glad that the Chairman has rejoined us. That is not a reflection on Deputy Michael D'Arcy.

I have simply requested a report on many of the facts surrounding this issue and fully appreciate that it is an issue of timing. What is happening is that banks are being treated like any other business and allowed to carry forward losses indefinitely. What the late Brian Lenihan had the foresight to do in the National Asset Management Agency Act 2009 was to provide that it would not be appropriate for financial institutions participating in NAMA to be treated like any other business. As a result of section 396C of the Taxes Consolidation Act, he made it clear that a portion of the participating institutions' income should be taxed in any given year. He achieved this by inserting in the legislation a provision that only 50% of losses could be carried forward in any given year. That was the purpose of the provision.

The Minister argued that in previous years he changed this provision. The former Minister's objective was clear. I was about to refer to a statement he made when I was interrupted by the Acting Chairman. Mr. Lenihan stated the NAMA legislation limited the amount of trading income of a participating institution and all other participating institutions in the same group against which losses carried forward could be offset in any accounting period to 50%. The objective, he continued, was to leave a portion of income in the tax net which would otherwise have been relieved by the use of losses carried forward. Unused losses could, he added, be carried forward indefinitely by companies until they were fully utilised and this remained the position both for institutions involved in the NAMA process and companies generally.

That was the intention. The Minister stated to us earlier today as well as in previous years that he got rid of section 396C because of the issue of capital and the risk that the State might have to recapitalise the banks because losses would not be accounted for in the way in which they are accounted for in terms of tier 1. However, there is a question whether that argument remains the case today. Time has moved on. Banks have become more profitable. I have given the Minister the figures that show the banks' capital has been restored. The intention behind section 396C was the right one. There may be merits in what he did a number of years ago in the Finance Bill, but there is a question whether that is still the case. I am asking for a report. Is the decision the Government took at that time still as valid today? Is the issue, which the Minister has repeated today, of a fall below the capital requirements of the banks, still valid? If not, then it is an issue of timing, but the State needs additional revenue now. Let us say that an assessment by the Minister's Department stated that reverting to what was originally in the tax code would not impact the capital position of the banks. It obviously would not impact the profitability of the banks because, one way or another, they will be able to carry forward these losses, either now or into the future. However, it will not impact on their profitability. The question is therefore whether we could revert to the position that existed under Brian Lenihan Jnr. and see the banks paying taxes now, next year and the year after that on the billions of euro in profits they are collectively making. We will get those taxes at some time in the future because the losses will run out, but we need them now to deal with some of the crises we have in our society. That is the argument I am making. I am not saying that we should do that here and now because I cannot put forward that proposal, but at a bare minimum we should consider this issue, a report should be done - I cannot imagine that it would be hugely complex as much of the data are available - and it should be published. This will continue to come up time and again, and we need to have an informed debate on it with all the facts. That could easily be done by the Minister's Department, and I cannot see a reason for his resistance to not doing it. If he is as sound in his arguments as he has expressed them today, a report of that nature could close this debate down, so I encourage him to accept the amendment I put forward seeking such a report to be commissioned by his Department.