Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

My amendment No. 45, like Deputy McGrath's amendment, relates to the carrying forward of bank losses. I have been raising this issue since 2014, when the then Fine Gael-Labour Party Government decided to change the provision which allowed for only 50% of losses to be carried forward. That provision was a deliberate inclusion in the NAMA Act 2009 by the then Minister, the late Brian Lenihan, who made the point when he introduced it in the Seanad - the Minister and I were both in that House at the time - that it was necessary because of the magnitude of bank losses that were being recorded. It was important, Mr. Lenihan noted, that these banks should start to pay a proportion of tax as soon as possible. Limiting the carrying forward capacity to 50% of losses showed the then Minister's foresight. He knew the banks would enter into profitability at some point and that if the standard 100% carry forward of losses in our tax code applied, then the banks would not be paying tax for decades. He did the right thing at that time.

However, the then Government decided to change that provision in 2014. I am not immune to the reasons this was done. Deputy McGrath referred to core tier 1 capital ratios and the fact that if the change was not made, some of the banks, including the pillar banks, may have needed to raise additional capital . If they could not raise it in the markets, it might have fallen to the Government to stump up more, which would not have been palatable to the Irish public.

However, we are now in 2017 and in a position where all of these banks have returned to profitability. AIB is on course to record a profit this year of €1.5 billion and to be one of the most profitable banks in Europe. Bank of Ireland made a profit of €1 billion last year and Permanent TSB entered into profitability last year, although it slipped back a little in the first six months of 2017. Taking AIB and Bank of Ireland, their combined profit of €2.5 billion would require a payment of €300 million if they had to pay corporation tax. They are paying nothing, however, because they are able to carry forward their losses. AIB told us it would be 20 years before it starts paying taxes and Permanent TSB said it would be in excess of 20 years before it begins making payments. The Bank of Ireland delegates indicated that it will be quite a number of years before their bank pays tax in the State. These banks have played fast and loose with Irish people's money. They have deprived Irish families of their homes and their futures, which has had an impact on individuals' sense of well-being and mental health. We are all familiar with this from the tracker mortgage scandal and many other scandals over the years.

The core issue here is the question of why the Government has not re-introduced the provision in the 2009 Act which was intended to be there for the duration of the banks' losses. That restriction was not intended by Brian Lenihan to operate only for a year or two. The late Minister knew the banks were never going to make a profit for a number of years. The provision was introduced with an eye to the situation we are in now, and the Late Mr. Lenihan knew we would reach this point some time in the future. The Minister, Deputy Donohoe, will talk about the bank levy but that is not the same. It is not based on profitability and is wider in its application than those institutions which have the major losses. One can argue that this is about deferred tax and the banks will end up paying the tax at some stage, when the losses are all used up. If we reverted to the 50% provision, we would just be allowing the banks to continue paying their losses over a longer period of time. The point is that we need the taxes now, not in 20 years time. We do not know what circumstances will prevail in the State in two decades but we do know we could use this revenue now to address the serious crises in health and housing. I strongly commend these amendments, which are merely seeking a report on this issue, incorporating the pre-2014 capital position.