Minister for Finance Jack Chambers has yet to decide if he will vary the total levy on the three main banks from its current level of €200 million during 2025.
Mr Chambers said on Tuesday that the level, first introduced in 2014, will be extended for another year.
He said he had yet to decide on the exact make-up and composition of the levy but made a specific reference to the high profit levels of the banks, which have partly derived from the hikes in interest rates over the past few years.
The levy, which generated circa €150 million each year, fell to €87 million in 2022 when Ulster Bank and KBC left the Irish market, leaving only the pillar banks: Bank of Ireland; AIB; and PTSB.
Donald Trump is changing America in ways that will reverberate long after he is dead
The jawdropper; the quickest split; the good turn: Miriam Lord’s 2024 Political Awards
The mystery is not why we Irish have responded to Israel’s barbarism. It’s why others have not
Enoch Burke released from prison as judge doubles fine for showing up at school
However, former minister for finance Michael McGrath announced in the Budget last autumn that the levy was being increased to a total of €200 million for the three banks based on their increased profitability.
Confirming on Tuesday that he is extending the levy for a further year, Mr Chambers said: “Banks in our country today are highly profitable and are benefiting from the stable and positive economic position we are in now.
“I think it is entirely appropriate that banks continue to make a contribution back to the State in this context.”
He said the exact scale of the level would be a decision for the Cabinet as part of Budget 2025, which will be unveiled on October 1st.
Sinn Féin spokesman on Finance Pearse Doherty called for the banking levy to be increased to €400 million due to soaring bank profits from rising interest rates.
“Banks have seen their profits and interest income reach eye-watering levels as households struggle,” he said. “While so many households have seen their income squeezed as their mortgage repayments rise, banks have announced large payouts to their shareholders.”
The bank level was introduced a decade ago after banks began to return to profitability after the financial crash. During that time the State provided €64 billion in recapitalisation funding to five banks: AIB; Bank of Ireland; PTSB: Anglo Irish Bank and the Irish Nationwide Building Society.
The rate of the levy varies each year with the aim of garnering circa €150 million in revenue for the State. It was reduced to €87 million in 2022 with the exit of KBC and Ulster Bank from the Irish market. In that year AIB paid €37 million; Bank of Ireland paid €25 million; and PTSB paid €22 million.
Mr Chambers has yet to indicate if he will push for an increase in the levy, given that the profitability of banks remains high.
In his statement he defended the continuation of the levy: “I think it is entirely appropriate that banks continue to make a contribution back to the State in this context. The return generated by the levy will provide me with additional scope on ensuring there is a substantial income tax package and options on further reducing the tax burden for families and workers as part of Budget 2025.
“I am acutely aware that many people are still struggling with the cost of living and providing additional support is a key focus for me and for the Government in the upcoming Budget.”
Following the statement, there has been a call for non-traditional banks to be included in the levy.
Wicklow Fine Gael councillor Peter Stapleton said online banks should be brought within the scope of the levy.
“The levy should be broadened and super-levied on to the online banks to try to force them to have branches and offices in Irish cities, towns, villages and communities,” he said.
“The absence of physical branches from towns and villages is denuding communities,” he said.
He said Bankinter and other new entrants to the Irish banking market such as Bunq, Revolut, N26 and others were welcome but they have come to the State because it is profitable.
“If online banks are only to take the upside of profit, it is ultimately bad for communities in Ireland,” he said.
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
