Joan Burton (Dublin West, Labour) | Oireachtas source

We have discussed this several times before with the Minister. I am sorry to say the Government is really cowardly on this issue. To recall the figures for the well-known banking sector, the high street banks, AIB has €3 billion of deferred tax assets. They are called deferred tax assets because they are worth that in terms of AIB being able to reduce its tax bill now that it has begun to make profits. We are all delighted that AIB is back in business and is doing much better because everybody in the State bailed it out. A deferred tax asset is part of the balance sheet and value structure. Perhaps the Minister is holding this deferred tax asset in this way in order to boost the company's value. Bank of Ireland has €1.3 billion in deferred tax assets, that is losses from the crash period which it can utilise as it begins to make profit and write off all of its profits without paying any tax. Somebody working in a hotel or restaurant will pay tax on their low income: somebody who is making profits of €1 billion a year will pay no tax. That situation will possibly continue because the bank will have capital allowances, intellectual property rights and so on. Permanent TSB has €373 million in deferred tax assets. We got a cheery little public relations statement during the week from KBC. I do not know whether it was toasting itself in the bank's headquarters because its owners abroad and staff in Ireland have discovered that they have approximately €128 million. That is all but that is still a good little deferred tax asset to have. There is also a wide range of other financial companies for which we do not know the details. There is a wide range of construction and development, land and property, companies, which because of the crash also have deferred tax assets.

The Minister has refused to address this issue. There are several ways to address it. From a fairness point of view, is it really correct that a family earning two salaries, whose joint worth ranges between €80,000 and €120,000, is properly contributing income tax, pay related social insurance, PRSI, and so on, and that a small business, a shop in any part of Ireland, that makes a profit of €50,000 or €100,000 potentially has to make a corporation tax contribution? We are very good at talking about the corporation tax contribution because, rightly, we say our corporation tax is very low, and the Minister has defended this. It is 12.5%. It is not as high as the top marginal rate of income tax that the couple on €90,000 or €100,000 will pay. The effective rate of tax in their joint cases is likely to be approximately 35%. We have tax structures that must raise the money we need to run the country but the Minister is saying that the banks and the construction and development companies, particularly those which speculated, drove the property bubble and crashed the economy bringing the banks with them, will be singled out for Fine Gael's and the Independent Alliance's largesse, care and consideration.

Remember that the corporation tax rate is only 12.5% here, after allowing due deductions for any capital investments and so on, in terms of purchasing capital into the country. Ordinary businesses pay that. I have gone to the OECD and negotiated on the base erosion and profit shifting, BEPS, process, of which I am a very strong supporter, because we need a fair taxation system which collects enough money to fund the country. The Government has said, "Hold on, there is an exception to this. Profitable banks will be left out of making a tax contribution." The people who work in the banks in different jobs pay income tax, the small and medium sized businesses who pay interest on their borrowings from the bank pay 12.5% on their taxable profit, but the banks themselves are picked out for a special exemption. I ask the Minister not to tell me that this is because Ireland has a tax law structure. Of course we do and in the ordinary course of events, if one makes an ordinary loss, of course that may be written off, but these are not ordinary losses. Over recent years, we have listened to and met with people who have been badly dealt with by the banks in respect of tracker mortgages. The Minister has himself acknowledged this in a very genuine way, but then he turns around to the same banks and tells them, "Folks, have a free ride on us". There are easy ways to address this issue. I was part of the discussion with Brian Lenihan to limit the banks use of losses.

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