asked the Minister for Finance whether he is satisfied that the tax avoidance measures in connection with leasing by the associated banks is not leading to excessive revenue losses to the Exchequer.
16.
Ceisteanna—Questions. Oral Answers. - Tax Avoidance Measures.
15.
asked the Minister for Finance the estimated revenue loss for the most recent financial year of the leasing arrangements between businesses and the banks.
With the permission of the Ceann Comhairle I propose to take Questions Nos. 15 and 16 together.
I am aware that the availability to industry of low-cost leasing of plant and machinery from the associated banks, as well as other financial institutions, results in a reduction in the amount of current revenue payable by those institutions to the Exchequer. This is because of the passing on to the banks and other institutions of accelerated tax capital allowances.
These institutions play an important role in providing for the requirements of Irish industry. Accordingly, in considering the question of the effect of low-cost financing arrangements on the tax yield from financial institutions, account needs to be taken of the benefits accruing to industry from those arrangements. The Commission on Taxation have been asked as a matter of urgency to examine this and I await their considered views.
There are no precise estimates available of the revenue loss as a consequence of leasing arrangements between businesses and the banks generally. The amount of revenue in question is estimated in broad terms to be of the order of £40 million.
I would be the first to accept the Minister's assurance that it is a job creation device. Is it not a fact that this is a tax evasion loophole through which the banks' profits are greatly increased? Is it not imperative, even if only in fairness to the unfortunate PAYE people, that this loophole should be closed? Would the Minister not agree?
Concern has been expressed by a number of Deputies about this matter. I can assure the Deputy that the Commission on Taxation have been asked as a matter of urgency to examine it and, when they report to the Minister, action will be taken very quickly.
I have here a figure of £146 million. Would that be a reasonable figure? It has been given by a person for whom I have a certain amount of regard.
The figure I have is £40 million.
Would the Minister ask the Commission on Taxation to investigate whether this form of capital subsidy works to the detriment of labour in manufacturing industry, whether it makes capital more attractive and labour less attractive?
I will ask the commission.
The Minister has told us he has asked the commission to look into this as a matter of urgency. When did he ask?
I have not got the information.
Was it in the last few days, weeks or months?
I just do not know.
Will the Minister be able to give me the information?
Yes.
Will the Minister say if it is Government policy to encourage leasing arrangements or venture capital—
The position is as I have outlined. The Government have asked the commission to examine the subject matter of the question. There are, of course, certain benefits which accrue to industry. The Deputy will be aware that, in reply to an article the banks have issued their own views. The Commission on Taxation have been asked and we will see how the position will develop.