Joan Burton (Dublin West, Labour) | Oireachtas source

I move amendment No. 109:

In page 100, between lines 34 and 35, to insert the following: “Report on bank levy

60.The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report comparing the revenue raised by the bank levy with the tax saved by the banks by carrying forward historic losses.”.

I hope the Minister will be able to accept this amendment in the interest of information being provided to people about what the alternatives are. The bank levy was introduced by the previous Government arising out of a proposal by the Labour Party in order to provide a mechanism for banks to contribute something to taxation. Many of the arguments put forward by the Minister today are eerily similar to those made during the last boom, according to which, if we do nothing, everything will be okay on the night.

I know the Minister's arguments about bank share values, etc. The idea here, however, is that in a democracy, a sector of the economy that was bailed out at extraordinary cost - I know there are people in this room who voted for the bailout on the night - should be in a position to sail away and contribute a modest levy of €150 million, while 70-year-olds who owe money in the form of mortgages are pursued by banks and other financial institutions. We proposed that the levy be significantly increased to provide for a number of items that are very much needed in the economy. The problem arises if the Minister decides to do what, unfortunately, was done in the run-up to the crash, which involved standing back. I know he will say that we now have the Irish Fiscal Advisory Council. I accept there are institutions in place but we should remember that the problems we face are not just problems arising in the Irish property market. They also involve the emergence of enormous difficulties in trade between China and the United States. As a very open economy, we are inevitably at risk from that, even though we desire none of it. We have a situation that, one way or another, Brexit is coming down the road and may cost us significant amounts of money. The Minister pitched his budget around the second point, namely, that owing to the dangers of Brexit, he would stall all increases in payments for people like pensioners, bar a very small number.

What I am suggesting is very simple. I am sure many of the Minister's staff could do it in half a day. It involves looking at what the bank levy has raised since its inception and, more particularly, what the tax savings to the banks have been through being able to carry forward historical losses and not having a minimum effective corporation tax which they should contribute. We could say that a 12.5% minimum effective rate is perhaps a stretch for the banks and, therefore, it could be half that amount. Instead, the Minister has shied away. A formula was introduced. It is understandable that in the aftermath of the bank crash that the banks incurred mega losses but in many cases, those losses are sitting there and they mean the banks will not make any financial contribution for a very long period. This stance by the Government has led to the banks becoming more and more arrogant. Bankers now feel they are seriously underpaid, under-rewarded and under-remunerated - whatever term one wants to use - and want to see executive salaries in the banks rise rapidly. They have had a PR industry extolling this message over the past year and a half.

There is nothing in the amendment that will scare the Department, except that it will probably annoy the banks a little that we would get a record from the Department of where the banks stand in respect of their tax contribution. By virtue of employment, banks clearly contribute to certain elements of the tax base. Their employees have the capacity to pay PAYE and the banks are contributors to PRSI and are significant renters of property. Equally, on that front, as the Minister is aware, they are slashing costs in terms of ordinary staff and outsourcing large amounts of their standard banking operations to merchant services companies in which pay and conditions are far inferior to those in traditional banks. What we are developing is a powerful financial sector that is seeking to improve profits for the obvious reason that it does not have to pay any tax and also reduce the pay and conditions of ordinary workers who, let us say, service the banks as they may or may not be in their direct employment.

The Minister needs to call a halt to the banks feeling so powerful, minded and looked after. There should be a banner outside the Department of Finance showing how much taxpayers provided to bail out the banks on the night of the guarantee and how much the banks have contributed back. Many bank staff would welcome that.

Dangerous comparisons are arising at the moment because of the global challenges we face. A trade war between China and America is the last thing we or any other country in the European Union needs, but such are the vagaries of politics at the moment that we must factor that in. Given that we face serious threats to the development of the economy, it makes sense to review this matter. As the Minister knows, it is not possible under financial rules to propose amendments that would increase the bank levy or compel the banks to pay minimum effective corporation tax rates. However, a compromise could be reached between the two options. The Government could continue with the bank levy while introducing a slightly more modest level of corporation tax. Financial institutions' only job is pushing money around, and as the former Governor of the Bank of England, Mervyn King, said, it is a pretty useless function. We need to build houses and create wealth for people by providing homes for them to live in and houses or apartments which they can rent or buy. At the moment, our country is dysfunctional in that respect because of the same banks, as the speculation related entirely to property last time.

This is the kind of data the Department should be producing as a standard. The same can be said of our previous discussion. The enemy of democracy in this case is the fact that these things are technically difficult and that many people do not have the figures available to them. We, the Minister and the Revenue Commissioners all know the losses carried forward by the banks at this point in time. Their overall capital is very valuable. The Minister's predecessor argued that to touch those values would somehow cause a grave disturbance. In the context of the threats we are now facing as an economy, we must look into this and talk about it. The Minister is shaking his head. Is he saying a trade war is not developing between China and America?