Pearse Doherty (Donegal, Sinn Fein)
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59. To ask the Minister for Finance if a 25% cap on bank losses that can be carried forward for the purposes of reducing corporation tax liability along the lines of the rules recently introduced in Britain will be supported; and if he will make a statement on the matter. [14034/18]

Pearse Doherty (Donegal, Sinn Fein)
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In the past month we have had the spectacle of AIB, Bank of Ireland and Permanent TSB announcing combined Irish profits of €2.7 billion, not one cent of which is paid in corporation tax by any of them as a result of a change to the law brought in by the Fine Gael Government. Looking across the globe, this is quite a unique situation. If we look at the OECD report, we will find we are an outlier compared with many of our European and indeed international counterparts. Will the Minister examine the example of Britain, which has reduced further from 50% to 25% the amount that can be carried on by financial institutions? This would see our financial institutions that have been bailed out by the Irish State starting to pay corporation tax in this State.

Paschal Donohoe (Dublin Central, Fine Gael)
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Corporation tax loss relief is provided for by section 396 of the Taxes Consolidation Act 1997. Loss relief for corporation tax is a long-standing feature of the Irish corporate tax system. It allows for losses incurred in the course of business to be accounted for when calculating a business's tax liabilities. This mechanism is a standard feature of corporation tax systems in all OECD countries.

Section 396C of the Taxes Consolidation Act 1997 previously restricted losses for NAMA-participating institutions to offset losses against 50% of taxable profits in a given year. At the time of the Act's introduction the Government had limited involvement in the banking system. However, by the Finance Bill 2013 this measure was considered to have outlasted its initial purpose. Due to the State's substantial holdings in the banking sector - 99.8% of AIB and 15% of BOI at the time - it was deemed to be acting against the State's interests.

Section 396C was repealed to reduce the State's role as a "backstop" provider of capital and to protect the existing value of the State's equity and debt investments.

With the removal of Section 396C, AIB and Bank of Ireland were restored to the same position as other Irish corporates, including other Irish banks, which effectively levelled the playing field.

As I have previously stated, I do not intend to change how tax losses are taxed for Irish banks, including those bailed out by the State, as I believe there could be consequences that would make it difficult for me to fulfil other objectives in respect of the Irish banking system.

On Committee Stage of the Finance Act 2017 I agreed that my officials would produce a report on the effect on limiting tax reliefs on losses carried forward for banks. It is envisaged that this report will be submitted to the committee in June of this year.

Pearse Doherty (Donegal, Sinn Fein)
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This is a national scandal. We are talking about €2.7 billion in profits by three banks which have been bailed out by the Irish people, banks that would not exist today if it were not for the fact that the Government at the time put its hands into citizens' pockets and put the money into those banks. This goes to the core of this issue. This is about fairness. The Minister said the carrying forward of losses is standard across the OECD. However, it is not standard the way we do it, whereby it is unlimited and one can carry forward forever and a day 100% of one's losses. The Minister talks about value in respect of the banks and other objectives. What we need is tax coming into this State to address some of the crises we have, with which the Minister is well familiar, namely, the fact that we have a homelessness crisis that is escalating, the fact that we have a housing crisis, the fact that we cannot provide for children with disabilities and the fact that we have hundreds of patients on hospital trolleys daily. However, the Minister is content to sit there and tell the Irish people he will not change any of this, that AIB will continue to pay no tax for 20 years, that Permanent TSB will operate in the same vein and that somehow this is okay.

Paschal Donohoe (Dublin Central, Fine Gael)
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I have other objectives I need to fulfil in respect of the Irish banking system. The State and the Irish taxpayer own a very large share of the banking system overall. I want to see the State get back that money. I also want to be in such a position that the dividends these banks have begun to pay the Irish taxpayer are maintained in the future. We also have in place a banking levy which is recouping some value for the taxpayer. We live in a time when we are dealing with other issues within our banking system that matter to citizens. For example, I go back to the question which Deputy McGrath raised with me and which Deputy Doherty will raise again, that is, how we can get to a point at which we can reduce further the level of non-performing loans we have in our banking system without causing additional difficulty and stress to our citizens. Decisions such as those Deputy Doherty proposes have an effect on this. Amid his acknowledgement of all that is going wrong in our society at present - I acknowledge there is great difficulty - we are making progress in other areas. I want Irish taxpayers to be able to get back the money they invested in owning our Irish banking system.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister is selling off parts of these banks already, and the investors buying the banks, which will not pay tax for the next two decades, are buying them from the Irish State. It is simply wrong, and the Minister needs to look at what his counterparts in other parts of the globe have done. Let us look at our nearest neighbours, Britain. They took a decision that the 50% carry forward for financial institutions that were bailed out by them was not sufficient. They also have a levy on those banks. They decided that one can carry forward only 25%, which would mean that banks would start paying taxes on the profits they make. We have some of the most profitable banks in Europe, which is no wonder, given the sweetheart deal this Government and the previous Government have carved out with those banks which allows them to pay no tax on billions in profit. I heard the banks talking about getting back to normality. Placing a cap on the losses that banks can carry forward is normal. It is what happens in Britain. It happens in France, Germany, Italy, Austria, Hungary and Poland. It happens in other countries where it is not unlimited, such as Canada, Costa Rica, the Czech Republic, Finland, Greece, Japan, Mexico and the Netherlands.

Declan Breathnach (Louth, Fianna Fail)
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If the Deputy wants-----

Pearse Doherty (Donegal, Sinn Fein)
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All these countries do this, yet the Government wants to be an outlier and to allow banks that we bailed out-----

Declan Breathnach (Louth, Fianna Fail)
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I call the Minister.

Pearse Doherty (Donegal, Sinn Fein)
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-----to continue to make billion-euro profits and not pay a penny to the Irish State for decades.

Declan Breathnach (Louth, Fianna Fail)
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The time has run out, Minister.

Paschal Donohoe (Dublin Central, Fine Gael)
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I have not had an opportunity to respond.

Declan Breathnach (Louth, Fianna Fail)
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I will give the Minister 15 seconds.

Paschal Donohoe (Dublin Central, Fine Gael)
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No. If the Acting Chairman-----

Declan Breathnach (Louth, Fianna Fail)
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Deputy Doherty talked down the clock.

Paschal Donohoe (Dublin Central, Fine Gael)
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The Acting Chairman should manage the contributions of other speakers. Deputy Doherty has put a set of questions to me; I must respond.

Declan Breathnach (Louth, Fianna Fail)
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I will give the Minister 30 seconds.

Paschal Donohoe (Dublin Central, Fine Gael)
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I should not be penalised-----

Declan Breathnach (Louth, Fianna Fail)
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The Minister is dead right.

Paschal Donohoe (Dublin Central, Fine Gael)
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-----for the Deputy's ability to go on. Of course, the reason Deputy Doherty makes such a statement is to deny me the opportunity to respond. I ask the Acting Chairman to allow me to respond.

Pearse Doherty (Donegal, Sinn Fein)
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I never objected to the Minister's having the opportunity to respond.

Paschal Donohoe (Dublin Central, Fine Gael)
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In what Deputy Doherty has outlined regarding our selling shares within AIB, of course what he has not acknowledged is that when we did sell a large share within AIB, we used the proceeds of that sale to reduce the borrowing the Irish taxpayer had to make to bail out those banks in the first instance. Deputy Doherty was among the most ardent of critics of the Irish taxpayer taking on more debt to support our banking system, and now that we have reduced a level of that debt which the Irish taxpayer had to incur, he is criticising the fact that I did that as well. We have competing objectives in respect of the banking system. I want to ensure we get back our money which was invested to support the banking system. I also want to ensure we have an Irish banking system that is capable of meeting the investment and credit needs of Irish small firms, Irish farmers and Irish agriculture. The course of action the Deputy is pursuing would have serious consequences-----

Pearse Doherty (Donegal, Sinn Fein)
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That they should pay tax.

Paschal Donohoe (Dublin Central, Fine Gael)
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-----for all of that. I have given a commitment-----

Pearse Doherty (Donegal, Sinn Fein)
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They should pay tax.

Paschal Donohoe (Dublin Central, Fine Gael)
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Again, I understand why the Deputy wants to shout me down. If I lay out any argument that is different from what he is putting forward, the only option open to him is to shout down the argument I am making. As he knows, I made a commitment in the Finance Bill to outline in greater detail what would be the consequences of such a course of action being pursued, and I will do that.

My guiding anchor in any decision I make is to get back for the Irish taxpayers the money they had to put into Irish banks and ensure that we have an Irish banking system which is more resilient for our economy in the future and able to support the jobs growth we will need in uncertain times.

Declan Breathnach (Louth, Fianna Fail)
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I remind Members that they have 30 seconds for their introduction, two minutes for the Minister's initial reply and four minutes overall for each question, including one minute for each supplementary question. If Members are not prepared to stick to the time I will not take the final supplementary question but will instead move onto the next question.