asked the Minister for Finance the total amount of corporation tax paid by the licensed banks in 1981, 1980, 1979, 1978 and 1977.
4.
Ceisteanna—Questions. Oral Answers. - Banks Tax Payments.
3.
asked the Minister for Finance the amount of corporation tax for 1980, 1979, 1978 and 1977 paid by the licensed banks after all deductions have been made and agreements finalised with the Inspector of Taxes.
5.
asked the Minister for Finance whether the proportion of corporation tax paid by all banks in Ireland is declining having regard to profits in recent years.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 3 to 5, inclusive, together.
I have been informed by the Revenue Commissioners that, in accordance with the principle of observing secrecy in relation to the taxation affairs of taxpayers, it is not the practice to give information concerning payments by individual taxpayers or by small groups of taxpayers. However, I would like to draw the attention of the Deputy to the published accounts of the two principal banking groups. According to their published accounts, the pre-tax profits and concurrent tax provisions of these two groups for the years in question were as follows:
|
Year Ended |
Pre-tax Profits |
Tax Provision |
|
£m. |
£m. |
|
|
31 March, 1977 |
55.4 |
17.4 |
|
31 March, 1978 |
83.3 |
23.9 |
|
31 March, 1979 |
87.9 |
5.2 |
|
31 March, 1980 |
82.6 |
8.6 |
|
31 March, 1981 |
105.6 |
15.1 |
The figures showing the tax provisions need not necessarily correspond with the amounts of tax actually paid during the accounting periods mentioned, because of adjustments which are made for tax purposes to the published accounts.
Is the Minister aware of the phenomenal growth in tax avoidance lending schemes? Would he give the estimated loss in revenue to the State in each of the last five years arising out of relief for industry, agriculture and shipbuilding which have accrued to banks and enterprises in the sections designated as entitled to tax relief under lending schemes, sometimes called tax-based lending? Will he take steps to ensure that tax reliefs intended for particular economic activities, such as job creation, will be used for that purpose and not shared with financial institutions for non-productive purposes?
I am looking for the figure for the amount of revenue actually foregone by those schemes. In the event of the tax benefits arising from leasing, section 84 loans and preference share financing schemes — the three categories involved — being abolished it is tentatively estimated that the banks liability to taxation would increase by approximately £40 million in a full year. However, it is contended by the banks that most of the relief concerned is in most cases passed on to manufacturing industry and no real advantage is given to the banks or their shareholders as a result of the schemes in question. This matter has been the subject of a submission by the Central Bank to the Commission on Taxation, to which the general subject was referred earlier this year.
Is it intended to amend section 84 of the Corporation Tax Act, 1976 which allows tax free companies to transfer capital allowances to the bank?
I am sure the Deputy appreciates that any change of this nature would be a budgetary matter and it would not be appropriate for me to indicate the Government's intention at this stage. This matter is receiving close attention from the Government at the present time. In the course of this examination the Government have to take into account not only the nominal tax paid by banks but also the effect any such change might have on the level of industrial incentives. As the Deputy will appreciate, we are competing to attract a relatively small pool of highly mobile industrial investment and any diminution in schemes which are beneficial to such mobile investment could discourage it from coming here. The Government must weigh this consideration in the balance against other considerations which have also to be taken into account.
Will the Minister bear in mind when looking at this subject the fact that the relief given in this case may well be passed on to industry and agriculture but this is done at the discretion of the lending institutions, which I believe should only be in the hands of the State? Does the Minister intend to bear this in mind when finally making a decision on whether he thinks it is appropriate to leave this facility available?
The Deputy has made what I regard as a very valid point. This point was made in another form by the Central Bank in their submission to the Commission on Taxation. They argued that any such subsidy to industry should be explicit and given by the State rather than given indirectly through any other institution in a manner over which the State does not have complete control. In assessing this matter we have got to look at all the considerations involved. I assure the Deputy and the House that we will take our responsibilities in this matter very seriously.
Is it contemplated that section 84 will operate in relation to farm lending by the banks?
The Deputy will appreciate that in reply to Deputy Sherlock I have indicated that any such decision which might be taken in the context of the extension, removal or the modification of the operation of the provisions of section 84 will fall to be considered by the Government in a budgetary context. At this stage I am not in a position to make any statement on the matter.
Is the Minister aware that some Ministers of his Government have given the impression that such a facility will be available in a matter of days in some instances?
I am aware that negotiations are being conducted by the Minister for Agriculture with the banks in regard to methods which might be used to assist the farming community in what the Government recognise are very acute financial difficulties which many of them face. The Government in this context in their negotiations with the banks are prepared to examine every possible avenue whereby assistance could be given by the financial institutions and the Government to farmers who, as a result of the impact of inflationary policies over the last number of years, are in serious difficulty.
Do I gather from what the Minister said earlier that somehow or other the discretion exercised by the ACC is suspect?
This question has nothing whatever to do with the ACC.
Lending institutions were mentioned. Is the Minister saying that the ACC is not meant?
If the Deputy cares to read the question he will see that it refers to licensed banks.
In the supplementary question asked by Deputy McCartin the implication was that the ACC might be meant. When the Minister was replying he mentioned agricultural institutions and I thought perhaps he might have been referring to the ACC.
I referred to agriculture in reply to a question from Deputy MacSharry. Deputy McCartin did not mention the ACC in his question, which relates to the operation of section 84 by the licensed banks.
When the Minister replied to Question No. 5, I did not hear what he said. The question asked whether the proportion of corporation tax paid by all banks in Ireland is declining having regard to the profits in recent years.
The Deputy can work that out for himself from the figures I have given him which are drawn, as I have indicated, from the published accounts of the two major licensed banking groups in so far as those figures reflect the true situation. It has not been the practice in the past for the Revenue Commissioners to give information about the tax payments of individual taxpayers or groups of taxpayers which might be so small as to render the individuals within that group identifiable.
6.
asked the Minister for Finance whether any bank received more in grants from all sources in 1977 and 1981 than they paid in Irish corporation tax.
As I have indicated in reply to the Deputy's three preceding questions regarding corporation tax paid by banks, the principle of confidentiality regarding taxpayers' affairs means that figures for the amount of corporation tax paid by each bank cannot be disclosed. I am also advised that information on the amount of grants paid to each bank is not readily available on the basis of statistics as at present compiled.
In these circumstances the Deputy will appreciate that it is not possible to carry out the bank-by-bank comparison of grants received and tax paid which would be necessary in order to answer his question.
Will the Minister tell the House if he supports paying to the banks taxpayers' money which was originally intended as an incentive for productive industry? He has stated he is not prepared to tell the House the amount paid since 1977. If the Minister has not that information now I am prepared to wait for it until a later time. Further, will the Minister state why the IDA did not list the amount of such grants paid by them to the banks in line with their policy of openness?
I will take the questions in reverse order. The policy of the IDA in this matter so far as the House is concerned is a matter to be dealt with by the responsible Minister who is not the Minister for Finance.
Which Minister?
The Minister for Industry and Energy.
There was some argument about that for quite a while.
The decision was quite clear. The Minister for Industry and Energy is responsible for the IDA. A question was also asked about payment of grants and if I supported payment of grants in these circumstances. As the Deputy will appreciate, this payment arises from the fact that State grants are payable to banks as they purchase plant and machinery under the present tax arrangements for on-leasing to their customers. As they are the technical owners of the machinery in question, it is appropriate that the grants should be paid to them. Obviously this practice would be changed if the leasing arrangements in the tax code were changed. The relevant question to ask is about the arrangements in the tax code rather than about payment of grants which is purely incidental to the arrangements that exist in the tax code.
Did the Minister say the reason he did not answer the question regarding grants paid by the IDA to the banks is because of a statutory regulation, or does he consider that it would not be in the best interest of the public to know the facts?
I must make a distinction here. In regard to the tax payments, the practice of not disclosing information arises not from a statutory provision but from a well-established practice of the Revenue Commissioners — not the Minister for Finance — not to disclose tax payments by individual taxpayers or groups of taxpayers that are so small as to render the individual members liable to identification. That is a practice I have inherited and I am following it. So far as the payment of grants is concerned, that is a matter for the IDA. If they choose to disclose information, that is their choice and, in the final analysis, it is the choice of their Minister. It is not mine.