Sir, – Minister for Finance Michael McGrath is “hinting” that he will increase the bank levy to penalise banks for their failure to pass on interest rate increases to their depositors (“Banks may be penalised for not passing on higher rates to savers, McGrath signals”, Business, August 25th). The Minister is well aware that this is nonsense and that an increase in the bank levy, while feeding the exchequer’s insatiable appetite, won’t put a cent in the accounts of depositors.
He might well seek to justify an increase in the levy by pointing out that banks won’t pay Irish corporation tax on their “windfall” profits because they can shelter them with tax losses arising from their insane lending in the good old days. It may be thought passing strange that the taxpayer who rescued the banks won’t see them pay corporation tax on current profits because the loan losses which necessitated the taxpayer rescue are now one of the banks’ most valuable assets.
The point is well illustrated by Bank of Ireland’s published results for 2022. On its total profits of €2,277 million for 2021 and 2022, it had a current tax liability of €46 million in Ireland and of €151 million outside Ireland. Most of its profits are earned in Ireland.
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As at December 31st, 2022, the value of the bank’s unutilised tax losses was €1,026 million of which €951 million related to Irish tax losses.
Given the Irish tax rate of 12.5 per cent, this implies that Bank of Ireland’s unutilised tax losses as of that date were of the order of €7,600 million.
Put another way, Bank of Ireland could earn profits of €7.6 billion in Ireland from January 1st, 2023, without paying Irish corporation tax.
If Mr McGrath was really concerned about deposit rates, rather than with reacting to the latest political hot potato, all he had to do over the past year or two was to call State Savings and suggest that they introduce a bit of competition. – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6.