Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The provision inserted by the late Brian Lenihan and referred to by Deputy Doherty involved much foresight and upheld the principle in our corporate tax code that trading losses can be carried forward indefinitely. The provision did not disallow tax losses from being utilised but instead lengthened the period over which they could be used by limiting the set-off to 50% of profit in any given year. Each year, at least half the profit would, therefore, be subject to tax and could not be sheltered by losses brought forward. That was changed in the Finance Act 2014, as referred to by Deputy Doherty.

The bank levy is not relevant to this discussion as it is a separate matter and is levied for different reasons. It is based on the deposit books of the institutions concerned. However, the relevant figures show that as at June of this year the deferred tax assets of Bank of Ireland included an amount of €1.25 billion in respect of tax losses available to relieve future profits from tax, while at the end of last year AIB had recognised deferred tax assets of €2.9 billion and Permanent TSB had deferred tax assets and tax losses carried forward of €373 million, equating to tax losses of just under €3 billion.

The Minister in effect promised a report.

The Minister needs to deliver a report on this issue. Before I made a decision on whether to change the policy I would need to see the full information. We have it on record from some banks that changing this provision, or reverting to the original provision in respect of limiting the losses that can be offset against profits, would not impact on their capital position in terms of the State having to inject new capital. We need to know the implications for Bank of Ireland, AIB and Permanent TSB, which it is widely known is not in such a strong position. We need that assessment and those facts on the impact on core tier 1 capital and on whether additional capital would have to be injected in the case of one bank I mentioned.

I respect and accept the principle of trading losses being carried forward indefinitely to be set off against future profits, and I support that. By any definition the events that happened between 2008 and 2011 or so, when the recapitalisation of the banks and the National Asset Management Agency, NAMA, transfers occurred and the losses were crystallised on the banks' books, were truly exceptional and extraordinary and resulted in enormous losses and deferred tax assets on the books of the banks.

The Minister needs to prepare a report on this issue. I understood it was pledged, in what form I am not entirely sure, but the Minister needs to do that. It is important that we tread carefully, that any change in policy is well thought through and that it examines all the consequences and fall out from such a change. We need that analysis and assessment and I hope the Minister will accept at least one of these amendments.

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