John Deasy (Waterford, Fine Gael)
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Question 45: To ask the Minister for Finance the timetable for the delivery of his promise to publish a paper setting out the options for the introduction of a Universal Social Contribution in advance of Budget 2011; if this paper will include an analysis of the impact of this new tax on work incentives for the unemployed and the low paid; and if he will make a statement on the matter. [33918/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy will be aware, I announced in the last Budget that, with a view to restoring balance in the income tax system, to simplify it, to make it fairer and more broadly based, I intended to introduce a new system of just two charges on income.

The possible parameters of such a system and potential impacts on individuals have been under active examination by my Department in consultation with the Department of Social Protection, the Revenue Commissioners and other Departments concerned. A Steering Group and a number of working groups were established to carry out the necessary research. I expect to see the Group's report shortly.

On receipt of this report, and having considered its contents, I will then decide on the possible publication of a discussion paper on the issue.

Eamon Gilmore (Dún Laoghaire, Labour)
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Question 46: To ask the Minister for Finance his views on the introduction of a financial transactions tax at EU level; and if he will make a statement on the matter. [34033/10]

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 underway in various fora internationally including the EU. The European Council in June agreed that EU Member States should introduce systems of levies and taxes on financial institutions to ensure fair burden-sharing and to set incentives to contain systemic risk. The Council called for careful assessment of the main features and issues of level playing field and cumulative impacts and invited the Council and the Commission to take this work forward and report back in October.

The IMF report to the G20 in June analysed various options including a financial transaction tax and proposed two possible contributions from the financial sector: a Bank Levy, or "Financial Stability Contribution" levy (FSC), to pay for the fiscal cost of government support of the sector; and a tax on financial transactions which involved two options, a Financial Transactions Tax (FTT), charged on financial transactions undertaken by financial institutions covering dealings by those institutions in stock, bonds and derivative transactions in exchanges as well as instruments traded "over the counter" rather than in a recognised exchange, but not transactions undertaken by individuals and businesses, or a Financial Activities Tax (FAT), a broader tax levied on the profits and remuneration of financial institutions, which is sometimes described as a form of VAT on financial institutions by targeting the 'added value' of the services they provide (there is no VAT on financial services in the EU).

In a May 2010 Communication, the European Commission supported 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. 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.

This is a complex area and careful consideration is being given at EU level to the issues involved. Ireland is of course participating in those deliberations.

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 underway 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.