Dáil votes by 93 to 35 against increasing €150m bank levy

An increase in the levy imposed on banks raised the chances of a legal challenge to the charge, Minister for Justice Charlie Flanagan has told the Dáil.

The House voted by 93 to 35 to retain it at the current €150 million level, despite calls for it to be increased to between €250 million and €400 million.

Sinn Féin, Labour and Aontú called for an increase in the levy.

Labour leader Brendan Howlin described the Government resolution as a technical measure to "hold still on the bank levy".

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He said the banks are organisations making up to €1 billion in profits. “The estimate is that there will be a hole of about €40 billion owned by the banking system to the people of Ireland especially when a budget is presented that doesn’t provide for a cost of living increase of up to 1.5 per cent next year.”

Sinn Féin public expenditure and reform spokesman David Cullinane said the Government could have increased the bank levy and raised revenue.

Aontú TD Peadar Tóibín said the levy was “pocket money” to the banks. He said the Government had deleted virtually all competition from the banks so that they were protected.

“It is now beyond time that the banks pay their fair share and they’re certainly not doing this.”

Banks continue to write off losses made during the crash against their profits and pay no tax on most of their profits.

But Mr Flanagan said Minister for Finance Paschal Donohoe and his department did consider a number of options, including raising the levy and imposing it on a permanent basis.

‘Higher interest rates’

There were however a “number of particularly strong reasons not to increase the yield further”.

The Minister said “it’s important that we ensure that the full cost doesn’t fall on consumers through higher interest rates on loans and higher banking fees”.

He added that a substantial rise would “increase the likelihood of a legal challenge to the bank levy given that credit unions are currently exempt and don’t make payments”.

Mr Flanagan added that “there have been suggestions that such a legal action might have unintended consequences for us as a revenue issue”.

He pointed out that at least one bank had left the Irish market and specifically stated that the levy “contributed to an exit”.