Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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212. To ask the Minister for Finance the full-year revenue that would be generated by imposing a financial transaction tax of 0.1% on shares and securities and 0.01% on derivatives; and if he will make a statement on the matter. [30995/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am taking this question to refer to the model of Financial Transactions Tax proposed by the European Commission, initially in 2011 and then revised under the EU’s enhanced cooperation procedure in February 2013. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%.

Based on the data currently held by the Revenue Commissioners or my Department it is not possible to accurately estimate the yield of a Financial Transactions Tax modelled on that proposed by the EU, i.e. a tax of 0.1% on share and bond transactions and 0.01% on derivative products. An important further consideration would also need to be given as to whether the existing Stamp Duty regime could co-exist with any Financial Transactions Tax proposal which might be implemented in such a scenario.

Ireland already has a tax on financial transactions, a Stamp Duty on transactions in shares, stocks and marketable securities that currently stands at 1%. I am advised by Revenue that the yield from this tax has been in the range of c. €380 to €500 million in the last five years. This data along with other information on stamp duty receipts is available on the Revenue website. Instruments used in the financial services industry such as derivatives are generally exempt from stamp duty, unless they relate to immovable property in Ireland or shares in Irish registered companies.

For additional information, in relation to a possible Financial Transactions Tax as an own resource for the EU budget, leaders agreed as part of the July 2020 Multi-annual Financial Framework (MFF) agreement that a Financial Transactions Tax may form part of a package of new own resources to finance the EU budget. However, at this point, no such proposal has been put forward by the Commission. If and when this happens, I will examine any proposal based on its merits and ensure it meets the criteria of fairness and equity.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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213. To ask the Minister for Finance the full-year revenue that would be generated disallowing historic losses (losses forward) as tax deductions for banks and insurance companies; and if he will make a statement on the matter. [30996/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that information in respect of losses forward by sector for the most recent years available is published in Revenue’s annual report on Corporation Tax, available on the Revenue website at www.revenue.ie/en/corporate/documents/research/ct-analysis-2023.pdf

Data in respect of banks and insurance companies only is not available. However, Figure 5 in the Revenue paper shows the amount of losses forward claimed by banks and other financial institutions is €99.3 billion in the year 2021. Approximately €2.7 billion of this was used in that year giving rise to a tax cost of approximately €0.3 billion. Therefore, the annual yield from disallowing claims in respect of historic losses for banks and other financial institutions would be in the region of this amount, assuming no significant change in the financial performance of the entities concerned.

As the Deputy is aware, 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 most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period. I would also note that changes to tax law are generally made on a prospective basis, so any losses already in the corporation tax system would not typically be affected.

Should such a restriction be introduced, it could have knock-on implications for the cost of lending and deposits, and for the cost of insurance for consumers and businesses in Ireland. It could also be expected to decrease the value of the State’s remaining shareholdings in the banks, because tax losses forward are included as a “deferred tax asset” on a company’s balance sheet and any restriction would lead to write-downs in the value of those assets.

As regards Irish banks, it should also be noted that they do currently pay some Irish corporation tax, as the tax losses forward do not shelter profits made in all their corporate entities.

The Deputy may recall that, in 2018, Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally. This paper is available online at www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/. It was further updated and re-circulated to members during the 2019 Finance Bill process.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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214. To ask the Minister for Finance the full-year revenue that would be generated by introducing a 4% levy on profits of pharmaceutical companies and private health companies; and if he will make a statement on the matter. [30997/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current regime are its simplicity and that it applies to a broad base.

Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden onto their suppliers or consumers.

I am advised by Revenue that, based on information included in Corporation Tax returns filed for the tax year 2021, the potential yield from imposing a 4% levy on the profits of private health and pharmaceutical companies is tentatively estimated to be in the region of €1 billion, with over 97% of this from pharmaceutical companies. I understand private health companies to include medical and dental private practices and exclude private nursing homes and retail pharmacies.

This yield is based on the economic sector of companies on Revenue records based on NACE codes and does not include any yield associated with subsidiaries of these companies not primarily involved in the sectors mentioned in the question. The potential yield estimate assumes no behavioural change on the part of these companies.

It should be noted that Ireland’s corporation tax regime has been undergoing a process of significant reform in recent years. The Deputy will be aware that Ireland signed up to the OECD Two Pillar agreement in October 2021, Pillar Two of which provides for a global minimum effective rate of 15%, on a jurisdictional basis, for in-scope entities. In-scope entities are groups with turnover in excess of €750 million per annum. An EU Directive has been agreed to provide a foundation for a coordinated implementation of Pillar Two, in accordance with EU law, by EU Member States. Extensive progress has already been made towards transposition, with some preparatory legislative changes introduced in Finance Bill 2022, and a Feedback Statement published in March this year containing draft approaches to a large proportion of the complex legislation that will be required to transpose the Directive in Finance Bill 2023.

In consideration of the need for certainty regarding our corporation tax regime, and of the significant international corporate tax developments already underway, I do not believe it is appropriate to introduce any additional taxes or levies on companies at this time.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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215. To ask the Minister for Finance the full-year revenue that would be generated by abolishing the SARP; and if he will make a statement on the matter. [30998/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Under section 825C to the Taxes Consolidation Act 1997, the Special Assignee Relief Programme (SARP) provides Income Tax relief for certain individuals assigned to work in the State during any of the tax years 2012 to 2025.

The aim of the relief is to reduce the cost to employers of assigning skilled individuals from foreign-based operations to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.

The latest annual costs available for SARP can be found in the 'Statistics on Special Assignee Relief Programme 2020'report which is published on the Revenue website at: www.revenue.ie/en/corporate/documents/research/sarp-report-2020.pdf

According to that report, the annual cost of SARP for 2012 to 2020 (the most recent year for which data are available) is as follows.

As the Deputy may be aware, following on from concerns regarding the increasing cost of the incentive, SARP was amended in Finance Bill 2018 to reinstate an upper salary threshold at the level of €1 million. This change came into effect for new entrants to the programme from 1 January 2019 and for existing beneficiaries from 1 January 2020 and, as a result, the 2019 and 2020 annual costs indicate a reversal in the growth in the overall cost of the scheme.

I am advised that Revenue does not maintain a projected future cost for SARP given the number of variables that would be involved in estimating with any degree of reliability. While abolishing SARP-related costs can be viewed as a saving to the Exchequer, likely losses resulting from lower employment levels (and related tax receipts) and other indirect effects within the activities that are supported by the Programme would also need to be factored into the equation. As such, it is not possible to estimate the likely savings which would accrue to the Exchequer in 2024 or in the years beyond that if SARP were abolished.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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216. To ask the Minister for Finance the full-year revenue that would be generated by establishing four new income tax bands of 50% on earnings between €100,000 and €150,000; 55% on earnings between €150,000 and €200,000; 60% on earnings between €200,000 and €275,000; 65% on earnings between over €275,000; and if he will make a statement on the matter. [30999/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that the estimated first and full year yield to the Exchequer of introducing the additional income tax rates and bands as outlined by the Deputy would be of the order of €2,350 million and €3,015 million respectively. The estimated yields are calculated on a taxpayer unit basis.