Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

This amendment refers to the model of financial transactions tax proposed by the European Commission, initially in 2011 and then revised under the EU’s enhanced co-operation procedure in February 2013. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%. Since it was first mooted, Ireland has had concerns about the financial transactions tax proposals which are widely shared by other member states, including some of the countries participating in enhanced co-operation. In line with these concerns, I continue to believe that the tax only makes sense if it applies on as wide an international basis as possible. Otherwise, transactions will gravitate toward those financial centres which are not covered by it.

If Ireland was to participate in an EU-wide financial transactions tax, this would necessitate the abolition and replacement of our current tax, a stamp duty on financial transactions. I am advised by Revenue that the yield from the Irish stamp duty of 1% on transactions in shares, stocks and marketable securities was €420.7 million in 2018 and currently stands at €326.5 million to the end of October 2019. Instruments used in the financial services industry such as derivatives are generally exempt from stamp duty unless they relate to immovable property in Ireland or shares in Irish registered companies. The financial transactions tax proposal is still being discussed by my Eurogroup colleagues and by the ten member states involved in the enhanced co-operation process, of which Ireland is not one.

I am aware that a number of EU member states, like ourselves, currently operate forms of a financial transactions tax. These include France and Italy, where such taxes are applied to shares in companies with market capitalisations in excess of €1 billion and €500 million respectively. If such conditions were to be put in place here, it is likely that our ability to levy such a tax would be severely limited.

It is not possible to accurately estimate from data held by Revenue the yield of a financial transactions tax modelled on the proposed EU one. Our concern is that we would be putting in place a tax on transactions which would likely leave Ireland unless such a measure was introduced at the same time across the EU, of which there is no sign at the moment. It is for these reasons that I am not in a position to accept this amendment.