Banks are making obscene profits – we should tax them to fund cost-of-living package, says Sinn Féin's Pearse Doherty

Irish Independent

2 days ago

AIB and Bank of Ireland have made combined profits of €5bn this year but will pay little or nothing in Irish corporation tax on the profits, Sinn Féin finance spokesman Pearse Doherty said.
This is because they are allowed to carry forward losses incurred during the banking collapse and set them off against any corporation tax they owe.
Mr Doherty called for the law to be changed to stop investors in the banks pocketing billions of euro in dividends.
If the profits of the banks were fully taxed, it would fund energy credits for families this winter, he added.
'There is something rotten at the core of our economy when banks can extract €5bn in profits and pay essentially no tax,' Mr Doherty said.
The two banks have a combined corporation tax liability of just €39m for 2024.
Obscene profits have been made over the last year
The Donegal TD said the Government needs to 'stop facilitating the banks to avoid paying taxes on profits' they have made off the back of ordinary workers.
'Obscene profits have been made over the last year as banks heaped more pressure on workers and families during a cost-of-living crisis,' he added.
The Government has said it will not be paying out a cost-of-living package, which included energy credits last year, in this October's budget.
Mr Doherty said: 'The two big banks in the State, AIB and Bank of Ireland, ­boasted a combined profit of €5bn in 2024.
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'We know from their financial statements that they now plan to not pay fair taxes on these unjustified profits – profits that are just the result of jacking up mortgage rates and short-changing savers.'
Mr Doherty referenced the ­annual report of Bank of Ireland, which he claimed shows it plans to pay less than 2pc of its profits in tax, just €31m in Irish corporation tax.
'But it gets worse,' he said. 'AIB plans to pay just 0.3pc in corporation tax, or just €8m, to the Irish public on the profits they made in 2024.'
He claimed this means Bank of Ireland is avoiding €221m in taxes, and AIB is avoiding paying €319m, even under Ireland's generous corporate tax rate of 12.5pc.
'That's over half a billion euro that could be helping workers and families through the cost-of-living crisis that is being siphoned off into corporate coffers and investors' pockets.'
He said AIB and Bank of Ireland avoid paying tax on their bumper profits by carrying forward losses they have incurred in the wake of the financial crash and the subsequent bailout.
The bailout is a gift that keeps on giving
Mr Doherty said Ireland is an outlier in effectively applying no limitation on corporations carrying forward losses.
He said the ability of bailed-out banks to avoid paying tax should end.
'The bailout is a gift that keeps on giving. And the Irish public keeps on paying,' he said.
'Government-sanctioned corporate profiteering needs to end.
'Banks must be made to pay their fair share of taxes.'
The Department of Finance said what it called 'loss relief for corporation tax' is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in all Organisation for Economic Co-operation and Development (OECD) countries.
'It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned on profits in one year and not allow relief for losses incurred in another,' it said.
Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.
AIB said it is a very long-established part of Irish tax legislation that a business that makes a loss can offset that loss against its profits in later years and that is standard across all sectors.
The bank added it adheres to all tax laws and rules and makes a significant tax contribution.
'In 2024, the total amount of taxes and levies paid and collected by AIB was €763m, with €376m of that paid by the group itself and a further €387m collected from employees, customers and shareholders, and paid over to the tax authorities,' it said.
It said that as a result of changes announced by the finance minister in the budget in October 2023, AIB's bank levy payment has increased from €37m in 2023 to €94m in 2024, with a further levy of €94m to be paid in 2025.
Bank of Ireland said that for last year, it will pay around €116m in Irish corporation taxes and levies made up of €31m in corporation tax and €85m for the bank levy.
Since its introduction in 2014, Bank of Ireland has paid €404m for the bank levy. The group also pays taxes on profits generated in other jurisdictions.
Bank of Ireland Group said, like any other company, it is allowed under the law and the tax codes to carry forward trading losses and utilise them against future trading profits.
Changing the rules risks making Ireland a less attractive location for inward investment.