Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

4 o’clock

I move amendment No. 42:

In page 41, between lines 35 and 36, to insert the following:“25.The Minister shall, within six months from the passing of this Act, prepare and lay before Dáil Éireann a report on options available to restrict banks from carrying forward losses against taxable profits of the banks, which could result in many institutions paying no corporation tax for the foreseeable future.”.

This is a very simple amendment, the provisions of which we have been debating for several years since the Government changed our tax code to allows banks to carry forward 100% of their losses against profits recorded. The Minister will correctly say that is standard accounting practice and is allowed for every company in Ireland. However, we must acknowledge that when the NAMA Act was going through the Oireachtas in 2009 at a time of great pressure, the then Minister, the late Brian Lenihan, had the foresight to recognise that while the banks were bust and needed to bailed out by the Irish people and had losses of tens of billions of euro - at that early stage the quantity of the losses were not known but there was an indication of how large they would be - when the banks became profitable again, normal accounting practice under the tax code should not apply to them because they would doubly benefit by not paying tax for a long period until all the losses they had incurred were absorbed, as well as the Irish public having had to put its hand in its pocket to pay for those losses. He made it very clear that should not apply to Irish banks that were guaranteed by the State and needed to be bailed out, which is why he introduced through the NAMA Act a change to the legislation to allow for only 50% of losses to be carried forward.

Similar to some of the points earlier made by the Minister's regarding intangible assets, this is a deferred tax. The same amount of tax will be paid unless the bank leaves the country or goes bust. Had the Brian Lenihan provision been kept in place, the banks would pay tax this year, next year and the year after. They can afford to do so. AIB is on course to record €1.5 billion profits this year, Bank of Ireland recorded €1 billion profits last year and Permanent TSB went into profitability last year. In spite of that, AIB and Permanent TSB told the finance committee that on current projections, it will be 20 years before they start to pay taxes to the Irish public. That is not acceptable to me, my party or the majority of the Irish people who understand the pain and suffering the people went through as a consequence of picking up the tab for those banks.

The Minister will point to the banking levy. It is a separate entity and also applies to banks that did not cause financial distress in the State. This amendment addresses a very clear issue in terms of carrying forward losses and that Members believe it is not right for one of the most profitable banks in Europe, which will record €1.5 billion in profits this year, not to pay any corporation tax for 20 years. My five year old will hopefully have finished college by then and be out in the world on his own. He will still be shouldering the banking debt because of the Anglo bonds and so on but it is only at that stage that AIB will start to pay tax. That is unacceptable.

Although I disagree with it, there was a reason at the time for the Government to change the Lenihan provision and that was because of the way capital losses are accounted for in terms of the capital within the accounts of the banks. The Government's argument was that if the tax code was not changed, the State may have had to provide additional capital to the banks, which would be completely unacceptable to the Irish people. The Minister was right to make that case. However, the current financial position of AIB tells us that if we revert to the position of the Lenihan provision, the State would not have to provide any additional capital. The same is true for Bank of Ireland. This is about raw fairness, which Irish people understand. We bailed out the banks that crushed the economy and destroyed families.

Members alone will make the decision on this issue. We have been sent here to make decisions such as this and within the next 30 minutes will have to decide whether we will accept that the most profitable banks in Europe will not pay a penny in corporation tax for over 20 years or will start to pay a portion of tax from next year while still allowing them to carry forward their losses and exhaust them over a longer period of time. However, at least the banks would then be starting to contribute to tax revenue and that could be used to provide for the real issues facing our people, society and country. Because it increases the fiscal space, it could be used to build houses, create child care places, extend hospitals in order that they have enough beds and provide greater protection for those who need it. Members need to decide on that issue within the next 30 minutes. I appeal to them to do what is right and what I believe the Irish people want us to do, which is to ensure fairness is brought to the heart of this discussion and this part of our tax code and to bring back the Lenihan provision that, with the foresight of what he believed the situation was going to be, would ensure profitable banks would pay some taxes. He knew they were going to be profitable again and, by God, they have become profitable on the backs of the Irish people. Now, not in 20 years' time, is when they should start to pay their taxes.

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