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Special Committee on the Finance Bill, 1992 debate -
Wednesday, 13 May 1992

SECTION 180.

Question proposed: "That section 180 stand part of the Bill."

Could I ask the Minister for the arrangements for the bank levy? Has it been established that the levy will be under the new mechanism? Will it come to the same amount as the levy payable in the present tax year?

Yes, the Exchequer take will be the same.

Equal in each year?

And the only modification is the offset of corporation taxes against it?

Yes, which is of benefit in the presentation of the banks' accounts.

Does that mean that the offset against corporation tax will result in a diminution in the contribution overall to the Exchequer or will the level of the contribution be maintained, taking into account the offset against corporation tax? Will there be a diminution in the contribution made by the banks when you take into account the offset against corporation tax under the new arrangements, or will the level of contribution be maintained at the level it has been at in recent years?

There will be an increase in the Corporation tax. The levy will stay the same for each of the years as agreed, but there will be an increase in the corporation tax.

Will the levy not be used as a carrot?

It is of benefit to the banks how they present this in their accounts. They prefer to deal with the corporation tax side and to set it off rather than have the levy.

It will appear in their accounts as a deduction against corporation tax?

No. The levy will still appear in the accounts, but the corporation tax will be offset.

Is the corporation tax based on the profits before the levy?

There will be more profits and, therefore, the corporation——

The incentive for them is to show higher profits because that is what is going to affect the dividends, and the confidence.

In effect, your commitment is that the combination of their calculations of the levy and the corporation tax will not exceed what they will pay next year?

That is right. The levy rate is a flat rate.

Question put and agreed to.

Chairman

Could I ask the committee if they would agree to Deputy Hilliard taking over from the Chair for 10 to 15 minutes? Agreed.

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