Paschal Donohoe (Dublin Central, Fine Gael)
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There are two different issues covered in these three amendments, namely, the bank levy and the corporation tax loss relief for banks. I will, therefore, address them individually, starting with amendments Nos. 74 and 75 on the bank levy.

As I announced in the budget, the revised form of the bank levy that was originally announced as part of budget 2024 was extended by one year in budget 2025 and is being further extended by this Bill. That will apply for one additional year. Extending the bank levy in increments of one year at a time ensures that the form, scope and revenue target of the levy can be assessed and calibrated on an annual basis in a manner that accounts for various factors, including the level of profitability of the sector from year to year and the performance of the liable institutions relative to each other.

To avoid the possibility of disincentivising the liable banks from offering improved returns on savings, this levy will continue to be based on the value of relevant deposits held by each of them at the end of a base year, which was previously 2022 but, with effect from next year, will be 2024, and not, as was the case prior to the Finance Act 2023, on the amount of DIRT they paid to the Exchequer in a specified base year.

Deputies Doherty and Farrell are seeking a report on the rate of the levy relative to the net interest income and operating profit for all in-scope institutions since the levy was introduced and the effective rate of equivalent levies in EU member states relative to the same base, as well as the issue of banks and whether they should contribute to the defective concrete block scheme. Deputy O’Callaghan is seeking a report on the potential revenue and industry impacts to increasing the banking levy.

In relation to Deputies Doherty and Farrell’s amendments, they will be aware that the credit institutions licensed by the Central Bank do not necessarily have to publish net interest income on a sub-consolidated basis. Prior to the amendments made in Finance (No. 2) Act 2023, the levy had a wider application, and some in-scope banks only reported net interest income on a consolidated basis with no breakdown available for their Irish subsidiaries. Therefore, any such historical analysis as suggested by the Deputies would be incomplete.

The defective concrete blocks grant scheme is under the remit of my colleague, the Minister for Housing, Local Government and Heritage, Deputy Browne. However, the revenue raised by the bank levy is not hypothecated and the annual yield contributes to the general Exchequer.

In relation to Deputy O’Callaghan’s amendment, which seeks a report on the potential revenue and industry impacts that would arise from increasing the bank levy, as I have noted, extending the levy by one year at a time ensures it will be reviewed annually by my Department as part of the decision-making process surrounding any further extension. He should note that the target yield for the levy in 2024 was €200 million, but €202 million was received.

Following the passing of the 20 October due date, I am informed by Revenue that €202 million has again been received this year. A similar amount will be received through the levy in 2026. Therefore, for the two years - 2024 and 2025 - that it has been in operation in its current form, the levy has raised considerably more than twice what was raised in each of the previous two years and one third more than the €150 million targeted each year between 2014 and 2021. The levy is intended to ensure that banks make a specified additional contribution to the Exchequer to reflect the substantial assistance provided to them by the State in response to that crisis, at a level that will also ensure that their stability is not put at risk.

I now turn to the corporation tax aspect, as covered in amendment No. 78. As Deputies are aware, corporate tax relief is a long-standing feature of the Irish corporate tax system and a standard feature of corporate tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another.

In 2018, officials from my Department produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation taxes more generally. It considered in some detail the potential impact of restricting the use of losses carried forward and the introduction of specified-time relief, as they might apply to Irish banks, to the wider banking sector or to the corporate sector as a whole. Among other considerations, it examined the possible effect of such a restriction on consumers, with the possibility that an increased cost base for the banks would be passed on to the consumer in the form of higher fees and interest rates or lower deposit rates. It considered the impact it could have on competition within the banking sector in Ireland, a factor of increasing relevance as banks have since left the Irish market. It also considered potential negative consequences for capital levels with possible resulting regulatory impacts.

In the case of the banks, it is important to acknowledge that the value of these tax losses to the State has been, and will continue to be, realised through share sales, which, of course, is what has happened. Despite the scale of losses accumulated, the banks contribute to the Exchequer through the financial institution levy.

For all those reasons, it is my view that it would be detrimental to consumers and, in the long run, to the taxpayer if a restriction were to be placed on the use of losses carried forward by the banks. To conclude, and in light of what I have said, I do not intend to accept any of the three amendments.