Oireachtas committees are an unusual beast. On the one hand they shine a light on important issues and give our legislators a chance to understand and interrogate key stakeholders. On the other, they encourage political grandstanding and provide those same legislators with a platform to criticise and denigrate attendees.
In the case of an Oireachtas finance committee on Thursday, executives from Permanent TSB were criticised for an issue outside of their control.
Cantillon is no defender of banks, and it's important they're held to account for failures on tracker mortgages as well as other matters.
But on Thursday the executives were castigated by one committee member because of accounting rules that require them to carry forward their losses, meaning the bank will avoid corporation tax for the next 23 years.
The member asked the bankers whether it was “morally right” that they won’t be paying any corporation tax for the foreseeable future, before calling such a practice disgraceful. The member also asked whether the practice constitutes “a second bailout”.
Carry forward
Perhaps it does, because if PTSB wasn’t allowed carry forward losses in the aftermath of the financial crash, the Irish taxpayer would have had to bail out the bank to a much larger degree than it did at a time when we didn’t have spare change.
But the member’s questioning was particularly egregious due to the fact PTSB has no control over the accounting requirements. It is our TDs and Senators who can change this practice if they so wish.
Rather than lambaste the banks that are following the rules on deferred tax assets, Cantillon would recommend that public representatives devise a solution to change those rules if they upset them so.
Admittedly, that may prove difficult considering Minister for Finance Paschal Donohoe has ruled out amending the regulations. Nonetheless, it does a disservice to both the public and the fabric of Oireachtas committees if those invited in are berated for not doing something about a matter completely outside of their control.
It should also be remembered that any benefit derived from PTSB from availing of these deferred tax assets falls largely to the State, which continues to own 75 per cent of the bank.
