Mr. Rónán Hession:

The principle at play in tax law is that we are going to tax you when you make a profit; conversely, as you work through the business cycle, if you made a loss in a previous period, you can carry it forward. We have seen the analysis Revenue published last year of the level of losses in the system. Overall, it is declining somewhat, but it is still very high, both in the banking sector and the corporate sector more widely. The banks obviously are carrying massive losses. Previously, the way that issue was approached was they were limited to only being able to offset them against half of their profits every year, but that became a problem a number of years ago when new European regulatory requirements under the capital requirements directive were introduced. That would have meant it would have required an injection of capital from the State into the banks to correct it. I think the policy change was made in 2014 to remove the restriction which at that stage was unique to the banking sector; other corporate sectors were not subject to it. Instead, the banking levy was introduced. I have to be careful not to stray into commenting on the merits of policy; I will just try to explain how the system works and why it is the way it is. The restriction on banks' ability to offset losses against profits was removed at the time, but in order to ensure revenue was still collected from the banking sector, the banking levy was introduced. It was due to expire in 2016 but was extended to 2020 or 2021.