Minister will not adopt levy on banks demanded by Greens

 

MINISTER FOR Finance Brian Lenihan will not now introduce the levy on banks demanded by the Green Party, but only apply a tax surcharge if they make a profit.

Early yesterday morning, Mr Lenihan signalled that he could not go ahead with the levy.

During the all-night committee stage debate on the legislation to establish the National Asset Management Agency (Nama), Mr Lenihan signalled his intention to introduce a corporation tax surcharge rather than a bank levy for the impaired loans, because it was “necessary to ensure the balance sheets of the banks are not infected with a contingency that’ll devalue them”.

But Labour finance spokeswoman Joan Burton warned it could be 40 years or more before the banks had to pay a levy.

Fine Gael deputy finance spokesman Kieran O’Donnell picked up on the issue when Mr Lenihan announced he would introduce an amendment at report stage next week “to provide for the future introduction of a future levy in the form of a tax surcharge on the participating institutions in the event of Nama making a loss”.

The Minister said: “While I do not envisage Nama will make a loss, this amendment will be drafted to strike a balance between protecting the public purse and not putting an unknown risk on to the balance sheets of the banks, which would defeat the purpose of the establishment of Nama.”

Mr O’Donnell said “the levy you’re bringing in is in the form of a tax surcharge. In the situation where the banks have losses forward, my understanding of what you’re saying is that the banks will pay no levy unless they are paying corporation tax.”

Mr Lenihan replied: “It’s in 10 years’ time, Deputy.”

The Fine Gael TD said the public’s expectation was that it would be done through a levy, but “you’re basing it on a tax surcharge rather than a bank levy. You are not deeming it to be an actual levy based on the actual losses incurred.”

Ms Burton said “there aren’t going to be any taxable profits for most of these institutions for a very long period because they have built up so much in the way of tax losses”.

She warned it might be decades before the banks had to pay. “The levy could be 40 years or more” away, she said.