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

I will deal with the two subjects that have been raised, namely, the decision I made on the bank levy and whether it should be increased further and the credit union levy. On the banking levy and its status, this is an issue that has been discussed in the debate on each Finance Bill, as has been acknowledged by various speakers. Last August, I published a report on foot of a debate on the Finance Bill of the previous year laying out the different consequences and issues arising from a proposed change to the level of the banking levy, what that could mean and the effect it could have in other areas of our economy. In that report, I outlined my concerns about the potential for any change in a tax on the banking sector to ultimately lead to other changes that would then be a problem for me and for the Oireachtas in terms of the effect on interest rates and banking fees. Inevitably, banks would seek to pass the cost of changes to taxation on to their customers.

I also outlined my concerns about my ability to be able to get back for the taxpayer all the money that was invested in our banks across the very dark period between 2008 and 2012. We have gained back some money from our share of a minority stake within AIB but we have a long way to go in terms of gaining back all of that money. This is a particular challenge at the moment given the value of shares within Irish banks at the moment. Deputy after Deputy has stated that we must get this money back. My concern is that if we were to make a change in the taxation of banks, it could have an impact on our ability to get taxpayers' money back. I am also not sure that we could do so just for banks; it is something that may have to be broader than the banking sector. As outlined in the report, I am concerned about how we would be able to say that we were going to increase the levy or change the tax for a particular part of our financial services sector but not for all parts. For example, if we were to do this, it would mean a change in taxation for other banks and financial services providers in Ireland. It would mean a change in the level of taxation for banks that are operating in Ireland but that did not receive support from the taxpayer. This would inevitably raise questions as to whether those banks would want to continue to provide services here. More particularly, would other banks want to come to Ireland if there were a considerable change in tax policy towards banks? It would also raise issues as to why the credit unions were not paying this levy. Questions would be asked as to how we could have increasing levels of taxation for one part of our financial services sector in Ireland while another part of the sector, namely the credit union movement, is not paying at all.

I have great concerns as to what this could mean for competition in the sector. We want to be in a place where we have more competition in Irish banking and my concern is that a change in tax for the banking sector alone would have an effect on the ability of the sector to attract more banks into it as well as on ensuring that those already in it will stay. The two key reasons for me not wanting to make this change are that it will weaken our ability to get our money back from Irish banks and that it is a cost that will very likely be felt in other ways by the taxpayer.

On the credit union issue raised by Deputy Naughten-----