Paul Gavan (Sinn Fein) | Oireachtas source

I thank Senator Higgins. Recommendation No. 12 calls for a report on restricting banks that were bailed out by the taxpayer from carrying forward losses against taxable profits in a manner that has previously resulted in many of them paying no corporation tax whatsoever. The report would also examine the introduction of a 25% cap on profits that could be written off by carried forward losses in any given year and the introduction of a ten-year limit on the use of losses for this purpose. As we enter a new phase of the pandemic, banks are returning to profitability. Indeed, the two largest banks in the sector, namely, AIB and Bank of Ireland, are increasing in scale due to the exit of KBC and Ulster Bank from the market, and as a result of recent acquisitions they have made.

As the Minister knows, Fine Gael changed the law in 2014 to remove the cap and allow bailed out banks to use 100% of the losses they incurred in previous years to offset future profits. Up until this change, these banks could only offset 50% of their prior losses against profits in any given year. We are unique in having neither a time limit nor a cap on losses that can be carried forward to write off against profits, though I would argue that we are the country where such restrictions are most justified. The proposal is that the banks bailed out by the taxpayer should be required pay corporation tax, and this recommendation calls for a report in order to scrutinise this proposal.