Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 39: To ask the Minister for Finance his views on the introduction of a bank levy, as proposed by the Internal Markets Commissioner; his views on whether the funds of any prospective bank tax should be part of an EU-wide fund or under national control; the relevant position that Ireland will be adopting on these issues; and if he will make a statement on the matter. [24531/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Consideration of how to ensure that the financial sector contributes to the cost of dealing with crises is under way in various fora internationally. In addition to the Communication from the European Commission referred to by the Deputy, the IMF is also examining this issue, at the request of the G20 and is due to present its final report to the G20 summit later this month. The Communiqué from the recent G20 Finance Ministers meeting on 5 June 2010 in Busan recognised that there is a range of policy approaches, and agreed to the development of principles reflecting the need to protect taxpayers, reduce risks from the financial system, protect the flow of credit in good times and bad, taking into account individual country's circumstances and options, and helping promote level playing field.

One possible mechanism for ensuring that the financial sector bears the costs is a bank levy, as set out in the Commission's Communication on Bank Resolution Funds. The Commission's Communication supports the establishment of ex ante resolution funds, funded by a levy on the banks to facilitate the managed failure of ailing banks in an orderly manner and suggests that a resolution fund should form part of the toolbox of measures available to Member States in an EU crisis management framework. It is important to note that an objective of the Commission's proposal, in conjunction with its wider proposals on a crisis management system, is to mitigate the burden on the taxpayer arising from financial crises. As acknowledged in the Commission Communication, it would be difficult at present to initiate a single pan European resolution fund.

In my dealing with the banks I have clearly maintained the principle that the banks will contribute to the cost of State's support - the banks have been charged for the Government's guarantee of their liabilities and the NAMA Act provides for a levy on the banks should NAMA result in a loss for the taxpayer. In the context of the enhancement of supervision and the restructuring of the banking sector under way in Ireland it is my intention to ensure that the sector contributes its appropriate share, thereby minimising as much as possible taxpayers' exposure to potential costs arising from State support of the banking sector.