Dr. Brian Keegan:

The general principle, and this harks back to the Chairman's original question, is that we have to abide by EU regulations on state aid. For that reason, to take the most obvious example, we cannot apply a different tax rate to a bank than a corner shop. It has to be 12.5%. We cannot make a distinction between different sectors of industry. The same principles would apply where availability of tax reliefs was being restricted.

Technically, it would be possible to draft legislation which would restrict the use of losses in a particular industry such as banking, manufacturing or whatever industry one cares to choose. Whether that would be permissible under EU rules which ensure no one sector can be favoured over another is a question that would really have to be teased out. Having said that, there are procedures, and Ireland does this all the time, whereby we approach the European Union, say we are proposing to do this in our tax legislation and ask whether it is acceptable under state aid rules. Conceivably, some kind of arrangement might be possible, but on first principles, we would need to be cautious about doing it.