Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

My amendment No. 26 is similar to Deputy Joan Burton's amendment but it is focused on restricting banks and financial institutions. We dealt with it on Committee Stage and I do not intend to go over it again because I assume we will be here till the very early hours of the morning at this rate.

Given that on the current figures we will have less than €600 million available for budget 2018, we will face many challenges. As the Minister mentioned to me previously, one of the ways of increasing fiscal space is by raising taxation. The measure in the National Asset Management Agency Act 2009, which was taken out of the Taxes Consolidation Act - I think in the Finance Act 2013 - was a prudent measure at its time and I believe it is still prudent today. While I disagreed at the time, it may have been right for the Government to remove it at the time because the Minister has made the argument that without removing it, the State would have to provide further capital to some of the financial institutions and I do not think anybody in this House - definitely not anyone from Sinn Féin - would stand over such a scenario.

The late Brian Lenihan put into the original legislation a provision allowing banks to offset only 50% of their trading income with losses being carried forward because he wanted to ensure that as soon as there would be a taxable profit, the State could start getting tax back from these banks when they were profitable. In fairness to the late Minister, that showed vision and foresight at a time when we were talking about massive losses, but he was able to see down the road that it would not always be that way. NAMA was going to buy the stressed debt from the banks. There was going to be a time when he envisaged - we all envisaged - the banks being profitable again. He therefore wanted to ensure that what is practice for every company operating in Ireland to carry forward losses indefinitely would not apply to the financial institutions and the losses could apply to only 50% of their traded income. I want the Government to look at that issue now.

If the report finds that if we did that it would mean certain financial institutions would fall below the capital ratios and they would have to either raise money in additional capital themselves or it would require the State to intervene, then at least we would have that information. However, there is no suggestion that is the case at this point in time. I appeal to the Minister to consider reintroducing this measure. Many of these banks are profitable but they are not paying the appropriate taxes as a result of being able to carry forward losses. This will continue for many years.

The argument has been made that we will get the money anyway. There is truth to that and nobody is denying it. However, it is a case of timing. If we get the money in 20 years' time as opposed to a bit now, a bit next year and a bit the year after, of course it is important to us because in the here and now we have existing pressures. We are all aware of the existing pressures in public pay. The Dublin Homeless Executive today referred to the scale of homelessness, which has increased by fivefold in the past two years. The numbers in this city are staggering and it is not confined just to this city unfortunately. We also have pressures in terms of services, capital infrastructure and so forth.

Doing this will not limit the value of the banks or limit the value of the shareholding because they are due to pay this anyway; it is a timing issue at a certain point in time. I appeal to the Government to consider the approach I have proposed, which is to go back to where we were in 2009 and reinsert the section 396C in the Taxes Consolidation Act to limit to 50% the amount of trading income a participating institution and all other participating institutions in the same group could have losses carried forward offset in any accounting period. That is a prudent approach.

I hope the Department of Finance issues a report and if that report finds that provision would have knock-on effects of which I am not aware, I am big enough to say that might not be right thing to do. However, this is one of the options we should consider for next year's Finance Bill.

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