Joan Burton (Dublin West, Labour)
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182. To ask the Minister for Finance if he will provide a full report on the way in which the annual €150 million banking levy will be calculated as it extends to 2021; and if he will make a statement on the matter. [16354/17]

Michael Noonan (Limerick City, Fine Gael)
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As I outlined in my response to the Deputy's questions on 17th January and 28th February last, in accordance with Section 126AA of the Stamp Duties Consolidation Act 1999, an annual levy was imposed on certain financial institutions for each of the years 2014, 2015 and 2016. The levy was charged at 35% of the Deposit Interest Retention Tax (DIRT) paid by a financial institution in 2011 and raises approximately €150 million annually for the Exchequer. In the case of a financial institution where the amount of DIRT in the base year does not exceed €100,000, the levy is not payable.

In the budget statement two years ago, I announced that I intended to extend the levy for a further five years to 2021. I indicated that the overall yield from the levy would be maintained at €150 million annually but that I would undertake a review of the DIRT based methodology for calculating the levy.

That review, which included a public consultation on the issue, was undertaken by my Department in early 2016. Following that review, I decided that the DIRT based formula should be retained but that the base year for calculating the levy in 2017 and 2018 would be changed from 2011 to 2015.  I have also decided to introduce a rolling two-year series of base years which will introduce a new base year of 2017 for calculating the levy in 2019 and 2020 and a new base year of 2019 for calculating the levy in 2021.

The introduction of the rolling two-year series of base years has a twofold effect. Firstly, it ensures that financial institutions entering the market over the five further years for which the levy will apply will be subject to the levy and financial institutions exiting the market will cease to be subject to the levy. Secondly, it will help to correct, on an ongoing basis, any anomalies for individual institutions thrown up by prevailing market conditions, such as the interest rate offering, in any one year.

In order to maintain the annual yield from the levy at €150 million, I have to increase the rate at which the levy is charged from 35% to 59% for 2017. This is because the assessable amount, DIRT payments in 2015, have reduced significantly since 2011. This new rate, combined with the new 2015 base year, will preserve the existing contribution of €150 million paid by the affected financial institutions.  That rate will be subject to review to ensure that the yield from the levy is not impacted from changes in interest rates and/or DIRT rates.