Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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101. To ask the Minister for Finance if he will introduce a windfall tax on banks and vulture funds; and if he will make a statement on the matter. [30200/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As a small open economy, connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, and we are committed under the Pillar Two agreement to increasing to an effective rate of 15% for in-scope companies. Some of the main features of the current regime are its simplicity and that it applies to a broad base.

Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden onto their suppliers or consumers.

In relation to introducing a windfall tax on banks, there are a number factors would need to be considered, such as the potential for negative impacts on bank customers and employees, and further reduced appetite for competition in a sector that has recently seen the departure of two significant banks. These issues have been considered and discussed with Deputies in detail in debates on various proposals relating to the taxation of the banking sector.

Deputies will be aware that a banking sector specific measure has been in place since 2014, in the form of the bank levy. As the levy is due to expire this year, my Department is currently carrying out a review to help inform consideration of its future. I hope to be in a position to announce my decision on the levy’s future, based on the review’s findings and recommendations, as part of Budget 2024.

In the area of investment funds, the Deputy will be aware that I published the terms of reference for a review of the funds sector on 6 April.

Taking account of the size and the interconnected nature of the international financial sector, this will be a comprehensive and holistic review of our framework for asset management and fund servicing. Specifically with regard to the taxation of funds, the review will examine the role of Real Estate Investment Trusts (REITs) and Irish Real Estate Funds (IREFs) in the property sector, including how they support housing policy objectives. There is a role for institutional investors in our housing market to provide the capital needed to meet critical housing needs, and the review will take an evidence-based approach to assessing this role.

The work of the Review has now commenced and a public consultation paper will be launched later this month. I would encourage all stakeholders with an interest in matters relating to the IREF and REIT regimes, including Deputies, to fully engage with the Review. The Review Team will present a draft Report to me by summer 2024.