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

As a small open economy connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. We are committed, under the pillar 2 agreement, to increasing to an effective rate of 15% for in-scope companies. Some of the main features of the current regime are its simplicity and that it applies to a broad base. Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden on to their suppliers or consumers.

A number of factors would need to be considered as regards introducing a windfall tax on banks, such as the potential for negative impacts on bank customers and bank employees, and further reduced appetite for competition in a sector that has recently seen the departure of two very significant retail banks. These issues have been considered and discussed with Deputies in detail in debates on various proposals relating to taxation of the banking sector.

Deputies will be aware that a banking sector-specific measure has been in place since 2014 in the form of a bank levy. As the levy is due to expire this year in law, my Department is currently carrying out a review to help inform consideration of its future. This has involved a public consultation that ran for a month and closed just last week. I hope to be in a position to announce my decision on the levy's future based on the review's findings and recommendations as part of budget 2024.

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