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

Under existing loss relief provisions in the taxes Acts, any unrelieved trading losses of a company for an accounting period may be carried forward for offset against trading income of the same trade and future accounting periods. Losses incurred in the carrying on of a trade are a normal fact of business life. The provision of relief for such losses is a standard feature of our tax code and that of all other OECD countries. It would be difficult to justify the taxation of business profits without also taking into account business losses. The carry forward of unrelieved trading losses is a usual feature in other tax jurisdictions, and that is the way corporation tax applies to business and how losses are treated.

In respect of the banks, the late Brian Lenihan Jnr. introduced the NAMA legislation at a very sensitive time. He brought in this provision. It was a decision which made the passage of the Bill more acceptable, but he never had any expectation that there would be a tax on bank profits at that point because there was no expectation that a bank would be profitable even if it were allowed to offset 50% of it losses against future profitability. It was not envisaged that the recovery would be rapid enough to put bank into profitability on the other 50%. That was not the issue. It changed in 2013 because circumstances had changed, in particular with the treatment under CRD IV of core tier 1 capital for banks provisioning. The capacity to write off historic losses against future profits was included in the calculation of capital requirements, but under Basel IV a termination date was put on this, and beyond a certain point it was signalled that this would not be acceptable. That is why I made the change. However, like the late Brian Lenihan Jnr., I envisaged that it would be generally unfair if the banks that had been such a causal factor in the recession that was visited on us were to pay no tax at all. Therefore, to substitute for the possibility of their only offsetting 50%, I introduced the levy, at €150 a year, and in this budget we have announced the renewal of that to 2020. Overall, therefore, about €1 billion will have been collected from the banks from 2011 to 2021 or whenever it is.

It is based on the DIRT paid, so it is related to the deposit base of the banks. Deputy Burton talked about a minimum tax regime for the banks. That is, in effect, what the levy is designed to do, to ensure that the banks pay a minimum amount of tax and that it is related to the deposit base. However, it is not a de minimisprovision like the 30% that must be paid in the personal tax code because personal taxes are paid on income whereas corporation tax is paid on profit. There is an assessment of the potential profit when the levy is being imposed. That is the current position.

On the issue of a report, I believe the dialogue across the House has put all relevant information on the record. I do not believe there is other relevant information that would be assessed in a report. My officials had conversations with the Revenue Commissioners when we were deciding on the new base on which the levy system should be grounded. The Revenue Commissioners have a large amount of information and if they have further information on this issue, I will communicate it to members on Report Stage.