Lynn Ruane (Independent) | Oireachtas source

I move recommendation No. 20:

In page 88, between lines 33 and 34, to insert the following: “Report on deferred tax assets

46.The Minister shall, within six months of the passing of this Act, lay before both Houses of the Oireachtas a report on the potential for restricting banks from utilising the deferred tax assets scheme.”.

The issue of deferred tax assets is something we raise year in and year out and nothing has been done thus far to fix what is clearly an issue with our tax regime. It has been well publicised that Irish banks benefit hugely from this scheme due to the amount of historic losses they had from the financial collapse in 2008, which for most people caused untold suffering and did not result in an effective tax write-off for them. In 2017, those banks shaved €400 million from their tax bills by offsetting financial crisis losses against taxable profits. What is most shocking about this policy to the average person is that these losses can be carried forward indefinitely to shield banks' future profits from tax. These banks are effectively avoiding the payment hundreds of millions of euro in tax, which they owe, by shielding profits with losses that occurred a decade ago. Prior to 2012, there was a 50% limit in place, imposed by the former Minister, Brian Lenihan. However, this was lifted by another former Minister, Michael Noonan, and has resulted in a number of banks being able to avoid paying taxes on profits. While I acknowledge the existence and application of the banking levy to which banks are subject, it is unacceptable that the banks are being shielded from paying taxes on these profits.

This scheme has a huge cost. The Comptroller and Auditor General has estimated that the future cost of forgone tax revenue from deferred tax assets could be as much as €29 billion, with €12 billion relating to the financial and insurance sector. This is revenue that could be used for housing, climate action, poverty reduction or healthcare but is instead being used to allow large financial institutions to avoid paying tax. Last year we saw banks start saying they have moved on from the crisis and are ready to start paying their bankers more than €500,000 and no longer want to apply pay restrictions. This is a signal that banks are ready to start paying tax again. If a bank is willing to start paying more than €500,000 to senior staff, it cannot also say it is still experiencing huge losses and is struggling because of the losses of a decade ago. It is reasonable that any bank which chooses to no longer apply the restriction or pay cap should no longer be able to avail of the deferred tax assets scheme. It should be able, since it can pay large salaries, to pay its tax contribution to the State. This is what recommendations Nos. 20 and 21 do.