Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 72:

In page 92, after line 39, to insert the following:

“Report on restricting banks from carrying forward losses

37.The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on restricting the banks from carrying forward losses against taxable profits in a manner which could result in many institutions paying no corporation tax for the foreseeable future by introducing a 25 per cent cap on profit that can be written off by carried forward losses in any given year and an absolute 10 year limit on the use of loss for this purpose.”.

We are familiar with this amendment. As we know, the late Brian Lenihan brought forward changes to the Finance Act at the time of the bank bailouts to ensure that when banks became profitable again, they would begin to pay tax at an earlier stage. He limited the amount of losses that could be carried forward to 50% for those who received the injection of capital from the State. This continued for a period until Fine Gael and the Labour Party decided to get rid of it and banks were allowed to carry forward 100% of their losses into the future. This is probably more relevant now than ever before. One could argue it by asking if it really matters, since at the end of the day, they will end up paying the tax at some point. The late Brian Lenihan made the point that they needed to start paying tax at the earliest stage possible, which is important.

We have seen a number of banks leave the Irish market. Those banks will not be in a position to pay taxes. We need to be careful with this. It means that banks which are now profitable, having recovered from the impacts of the pandemic, will not pay any corporation tax on their profits in Ireland this year, including AIB and Bank of Ireland. They will pay corporation tax on their profits in England but they will not pay taxes on the profit they make in Ireland. This amendment is about going back to what Brian Lenihan introduced, which reduced the amount of losses that can be carried forward in any given year and ensuring that they cannot carry forward those losses indefinitely. Ireland is one of the outliers in the European Union since it allows the carrying forward of 100% of losses for an unlimited time. Countries usually have percentages that can be carried forward or a period of time like ten or 15 years.