Willie O'Dea (Limerick East, Fianna Fail)

Section 222 provides for a future surcharge on the participating institutions in the unlikely event of NAMA making a loss. This section has been carefully drafted to strike the necessary balance between, first, affording the taxpayer maximum protection against the possibility, however unlikely, that a loss might eventually arise and, second, the risk that the application of a statutory surcharge could result in the participating institution having to provide for a future liability in its accounts in line with international accounting standards. It strikes the balance by providing for an effective statement of intent that a surcharge may be imposed by way of a Finance Act provision at a specific point in the future in the event of NAMA having made an aggregate loss at that time. The loss will have to be certified by the Comptroller and Auditor General, based on his or her auditing of the accounts of NAMA from its establishment to the date on which the surcharge is to be applied.

The proposed surcharge will have the following characteristics. No surcharge will apply until at least ten years after the passing of the NAMA Bill. The aggregate surcharge to be imposed will not exceed the loss incurred by NAMA. The surcharge will be apportioned among the participating institutions according to the book value of the assets transferred to NAMA. In other words, the aggregate book value of all the assets transferred from the different institutions will be examined and the proportion of the surcharge for which any one institution will be liable will be the percentage of assets it transferred to NAMA. The other characteristic is that the surcharge imposed on any institution will not exceed the amount of corporation tax due in that period.

The proposed amendment provides another way of calculating the participating institutions' contribution to the surcharge. We believe the way proposed in the Bill strikes the balance better than what the Senator proposes.