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General Irish Government discussion thread [See Post 1805]
Comments
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Red_Wake wrote:They have estimated they will not be paying tax on profits for up to 30 years. This is due corporations being allowed to stockpile previous years' losses and write them off against future tax bills. It's available to any corporation, so is not unique to AIB.
It's also not unique to corporations individuals can also avail of loss relief.
Personally I don't see the issue. All AIB are doing is following the law. It also had and has the benefit of creating deferred tax assets on their balance sheet which ultimately reduced the size of the bailout required. Also its doubtful this situation will reoccur unless you have another state bailout of a company. The losses sustained by the banks would have sent any other company bust.0 -
It's also not unique to corporations individuals can also avail of loss relief.
Personally I don't see the issue. All AIB are doing is following the law. It also had and has the benefit of creating deferred tax assets on their balance sheet which ultimately reduced the size of the bailout required. Also its doubtful this situation will reoccur unless you have another state bailout of a company. The losses sustained by the banks would have sent any other company bust.
There's your issue right there. AIB are being lawful. There's no suggestion otherwise.
It's a bit rich to look to the most vulnerable in society to fund social housing to quell a crisis created in part by financial institutions and developers coupled with lackluster regulation, while on the other hand enabling developers and financial institutions who cost the tax payer money, profit off their prior loses with cheap loans off the tax payer and no tax paid on profits due to loses incurred. Just pointing that out is all.0 -
Matt Barrett wrote:There's your issue right there. AIB are being lawful. There's no suggestion otherwise. It's a bit rich to look to the most vulnerable in society to fund social housing to quell a crisis created in part by financial institutions and developers coupled with lackluster regulation, while on the other hand enabling developers and financial institutions who cost the tax payer money, profit off their prior loses with cheap loans off the tax payer and no tax paid on profits due to loses incurred. Just pointing that out is all.
What's your evidence that overall the decision has resulted in a net loss to the government? It's not as clear cut as you assume. You could be right but also wrong given how these tax losses impact a banks/any companies accounts.
The thing is these losses ultimately saved and are saving the government money. Then enabled larger deferred assets(therefore larger total assets) on a banks balance sheet and thus reduced the amount the government had to borrow to bail the banks out and also saved on interest payments related to this debt. Given that banks are public institutions and have to file accounts its perfectly possible to estimate the cost/benefit of allowing these losses against tax on future taxable profits(note accounting profit and taxable profit are not the same, which gives rise to deferred tax assets /liabilities) . So yes while the government is losing out on tax revenue as a result of the losses it also saved money via a reduced bailout amount and associated interest fees. Its a cost benefit question.
Personally I wouldn't be against looking at making changes to loss relief. But it's a complicated area. Aside from the relevant tax law, changes will also impact a companies accounts. It's something for people in Revenue and other people who understand the area to have a look at.0 -
What's your evidence that overall the decision has resulted in a net loss to the government? It's not as clear cut as you assume. You could be right but also wrong given how these tax losses impact a banks/any companies accounts.
The thing is these losses ultimately saved and are saving the government money. Then enabled larger deferred assets(therefore larger total assets) on a banks balance sheet and thus reduced the amount the government had to borrow to bail the banks out and also saved on interest payments related to this debt. Given that banks are public institutions and have to file accounts its perfectly possible to estimate the cost/benefit of allowing these losses against tax on future taxable profits(note accounting profit and taxable profit are not the same, which gives rise to deferred tax assets /liabilities) . So yes while the government is losing out on tax revenue as a result of the losses it also saved money via a reduced bailout amount and associated interest fees. Its a cost benefit question.
Personally I wouldn't be against looking at making changes to loss relief. But it's a complicated area. Aside from the relevant tax law, changes will also impact a companies accounts. It's something for people in Revenue and other people who understand the area to have a look at.
Agreed and thanks for the clarification.
It's referred to as 'tax on profits', I would take that to mean profit after meeting any debts owed. Are all of AIB's debts to the state repaid? Does no tax on profits mean no tax on profits after all debts are paid? Is the idea that AIB didn't cost the tax payer as much as they could have benefiting AIB? I don't know.
My point is when looking for funding to finance social housing builds, why look to the most vulnerable in society when there may be monies elsewhere? I gave the AIB no tax on profits as a possible area to look at before a tax payer who can't make rent reliant on state aid. The word 'profits' has me thinking no tax on monies after debts, costs and salaries are met. That's what caught my eye. I may be wrong, but either way looking to those worse off to glean a few euro off to fund a possible solution to a crisis in the most part caused by others, is a bit much IMO.0 -
The government are still the largest shareholder in AIB, so while they won’t receive tax on profits for a number of years, they would receive dividends if they are paid out from the profits. Whatever isn't paid in dividends will presumably end up on the balance sheet and increase the value of the governments shareholding allowing to sell them for increased value in the future. 13.5% corporation tax could well pale into insignificance when compared to dividends and capital gains. It’s not as if the government have to pay income tax or CGT on them.0
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Matt Barrett wrote: »Agreed and thanks for the clarification.
It's referred to as 'tax on profits', I would take that to mean profit after meeting any debts owed. Are all of AIB's debts to the state repaid? Does no tax on profits mean no tax on profits after all debts are paid? Is the idea that AIB didn't cost the tax payer as much as they could have benefiting AIB? I don't know.
My point is when looking for funding to finance social housing builds, why look to the most vulnerable in society when there may be monies elsewhere? I gave the AIB no tax on profits as a possible area to look at before a tax payer who can't make rent reliant on state aid. The word 'profits' has me thinking no tax on monies after debts, costs and salaries are met. That's what caught my eye. I may be wrong, but either way looking to those worse off to glean a few euro off to fund a possible solution to a crisis in the most part caused by others, is a bit much IMO.
Not unexpectedly you seem to be completely unaware that the Govt owns approximately 75% of AIB.
So if any profits are distributed the Govt gets 75% of those plus the income tax on the income to the other shareholders.
Plus the more profits made, and dividends declared, the capital value of AIB increases and can be captured by the Govt in another share sale.
Amazing that you should devote so much hot air to AIB contributing to housing when you can see no link between water charges and housing - social and other.0 -
Matt Barrett wrote:Agreed and thanks for the clarification. It's referred to as 'tax on profits', I would take that to mean profit after meeting any debts owed. Are all of AIB's debts to the state repaid? Does no tax on profits mean no tax on profits after all debts are paid? Is the idea that AIB didn't cost the tax payer as much as they could have benefiting AIB? I don't know. My point is when looking for funding to finance social housing builds, why look to the most vulnerable in society when there may be monies elsewhere? I gave the AIB no tax on profits as a possible area to look at before a tax payer who can't make rent reliant on state aid. The word 'profits' has me thinking no tax on monies after debts, costs and salaries are met. That's what caught my eye. I may be wrong, but either way looking to those worse off to glean a few euro off to fund a possible solution to a crisis in the most part caused by others, is a bit much IMO.
If you want to understand exactly what is meant by the word profits at least in a accounting sense you are going to have to look up IFRS(International financial reporting standards). In general profit is revenue minus costs which includes the cost of debt finance. But for specifics you will have look up and understand IFRS which I assume AIB are using. As I have said a companies taxable profit will be different to the accounting profit due to Revenue using different rules when compared to whatever set of accounting standards are being used.
As others have pointed out the government owns the majority of AIB so most of the profit after tax is due to the government anyway.0 -
Matt Barrett wrote: »Agreed and thanks for the clarification.
It's referred to as 'tax on profits', I would take that to mean profit after meeting any debts owed. Are all of AIB's debts to the state repaid? Does no tax on profits mean no tax on profits after all debts are paid? Is the idea that AIB didn't cost the tax payer as much as they could have benefiting AIB? I don't know.
My point is when looking for funding to finance social housing builds, why look to the most vulnerable in society when there may be monies elsewhere? I gave the AIB no tax on profits as a possible area to look at before a tax payer who can't make rent reliant on state aid. The word 'profits' has me thinking no tax on monies after debts, costs and salaries are met. That's what caught my eye. I may be wrong, but either way looking to those worse off to glean a few euro off to fund a possible solution to a crisis in the most part caused by others, is a bit much IMO.
Note that debt capital repayments are not an allowable deduction when calculating profits.
Interest on debts is an allowable business expense.
The bigger issue is that all companies are allowed carry forward past losses against future profits.
So AIB is being treated like any firm. It is allowed to use past losses to reduce current profits.0 -
Geuze wrote:Note that debt capital repayments are not an allowable deduction when calculating profits.
In terms of the banks correct me if I'm wrong but wasn't all/nearby all the money leant to the banks invested in equity and not debt. So if the government does want more from the banks all it has to do ask the banks for dividend payments. From memory the government also bought a lot of preference shares and would probably get more than 75% of the dividends on AIBs case. A far better return than what they would get via 12.5% corporation tax.0 -
Matt Barrett wrote: »
Again, I would look to amending such things before looking to the most vulnerable. I am not going down the rabbit hole of corporation tax and re-evaluating it nationally for your pleasure. My point is we can look in other places before we look to the tax payers in need of state aid to function, this would be one such area. What if profits far exceed any reported losses? That's an angle were tax might be recouped over the suggested 30 year period. They should not see any benefit from losses accrued and put on the tax payer anyway.
Hold your horses there chief. Nobody is lambasting AIB for availing of legal taxation policy.
I'll give you Irony, NAMA loaning tax payer money recouped from failed developers to fund developers for their own private profit. Likely, some of the the very people who created the need for NAMA. Here's another, a bank which went belly up as you say not having to pay tax on any profits for the next 30 years possibly, while some think looking at the poor to fund social housing is a legit proposition.
If profits exceed reported losses, they will pay tax.0 -
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If profits exceed reported losses, they will pay tax.
If AIB had their old losses terminated after a number years, the Gov would get Corpoartion tax of 100% of those profits but only 75% of the dividends. If the losses carry on for ever until the profits exceed the losses, then the Gov gets 100% of the Corporation Tax after that time, and 75% of the dividends in th meantime.
Clearly terminating the carry forward of the losses would net the Gov more. It wouls appear reasonable to limit the time losses can be carried forward.0 -
Sam Russell wrote: »If AIB had their old losses terminated after a number years, the Gov would get Corpoartion tax of 100% of those profits but only 75% of the dividends. If the losses carry on for ever until the profits exceed the losses, then the Gov gets 100% of the Corporation Tax after that time, and 75% of the dividends in th meantime.
Clearly terminating the carry forward of the losses would net the Gov more. It wouls appear reasonable to limit the time losses can be carried forward.
Except you can't do that just for the banks that were bailed out, it would require a fundamental change in corporation tax.
That doesn't mean I am against it. It is just that the effects on all other corporations will have to be taken into account, as well as the likely behavioural changes that would occur.
We did have a banking levy in the past. It is something that could be looked at again.0 -
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Except you can't do that just for the banks that were bailed out, it would require a fundamental change in corporation tax.
That doesn't mean I am against it. It is just that the effects on all other corporations will have to be taken into account, as well as the likely behavioural changes that would occur.
We did have a banking levy in the past. It is something that could be looked at again.
I agree it would apply to all Corporations.
Remember, debts can only be collected for a 6 year period, so why not the same for losses.
A bank levy is a good tax, as banks enjoy a very privileged status, and it is reasonable that they should pay for that privelege.0 -
Correct, Matt seems to think that AIB have been given a blanket exemption from Corporation Tax for the next 30 years by their fairy godmother[another FG for him to keep an eye on].Matt Barrett wrote: »
Again, I would look to amending such things before looking to the most vulnerable. I am not going down the rabbit hole of corporation tax and re-evaluating it nationally for your pleasure. My point is we can look in other places before we look to the tax payers in need of state aid to function, this would be one such area. What if profits far exceed any reported losses? That's an angle were tax might be recouped over the suggested 30 year period. They should not see any benefit from losses accrued and put on the tax payer anyway.
Hold your horses there chief. Nobody is lambasting AIB for availing of legal taxation policy.
I'll give you Irony, NAMA loaning tax payer money recouped from failed developers to fund developers for their own private profit. Likely, some of the the very people who created the need for NAMA. Here's another, a bank which went belly up as you say not having to pay tax on any profits for the next 30 years possibly, while some think looking at the poor to fund social housing is a legit proposition.
If profits exceed reported losses, they will pay tax.0 -
Good loser wrote: »Not unexpectedly you seem to be completely unaware that the Govt owns approximately 75% of AIB.
So if any profits are distributed the Govt gets 75% of those plus the income tax on the income to the other shareholders.
Plus the more profits made, and dividends declared, the capital value of AIB increases and can be captured by the Govt in another share sale.
Amazing that you should devote so much hot air to AIB contributing to housing when you can see no link between water charges and housing - social and other.
I seem to recall some kind of bail out and state taking hold of private concerns alright. Have we met? You seem to be personalising a discussion on funding social housing builds.
I've given an honest opinion and thanked people for information while asking questions in areas I am unsure of. What is your problem?
Now you are rehashing points already covered.
'Hot air'? I referenced a news item and suggested going after the most vulnerable in society for social housing funding shouldn't be the first stop. Now you're on about water charges? Are you just looking to be argumentative rather than discuss things? Going after the most vunerable, despite your anecdotal "stats" is not the way to go IMO. It's unfortunate you let such things upset you so.0 -
I appreciate the input re: AIB, but one could be forgiven for thinking there was a concerted effort to move away from discussing the housing crisis, social housing funding by picking an element within the broader comment and nailing it to the floor ad nausem as happens pretty much every time the issue is raised.Correct, Matt seems to think that AIB have been given a blanket exemption from Corporation Tax for the next 30 years by their fairy godmother[another FG for him to keep an eye on].
No I don't, I believe I mentioned the word 'profit'. You insist on paraphrasing and inferring at Beano comic levels, but what ever gets you excited.
Any thoughts on funding for social housing beside taking money from tax payers the state gives aid to? Dogs for the blind? Surely there's an app can replace the dags?0 -
Matt Barrett wrote: »I appreciate the input re: AIB, but one could be forgiven for thinking there was a concerted effort to move away from discussing the housing crisis, social housing funding by picking an element within the broader comment and nailing it to the floor ad nausem as happens pretty much every time the issue is raised.Correct, Matt seems to think that AIB have been given a blanket exemption from Corporation Tax for the next 30 years by their fairy godmother[another FG for him to keep an eye on].
No I don't, I believe I mentioned the word 'profit'. You insist on paraphrasing and inferring at Beano comic levels, but what ever gets you excited.
Any thoughts on funding for social housing beside taking money from tax payers the state gives aid to? Dogs for the blind? Surely there's an app can replace the dags?
Matt, you're the very person who kept bringing up AIB, but when the details and nuances of it are explained to you it's people trying to divert the discussion.
I've outlined why I think social housing - the local government had a vested interest in not running the system correctly. I would be reluctant to fund a project which I view a ready made poverty trap. I would require a massive overhaul of social housing[particularly how payments are collected and arrears are dealt with] before I'd put a cent into it.0 -
Matt, you're the very person who kept bringing up AIB, but when the details and nuances of it are explained to you it's people trying to divert the discussion.
I've outlined why I think social housing - the local government had a vested interest in not running the system correctly. I would be reluctant to fund a project which I view a ready made poverty trap. I would require a massive overhaul of social housing[particularly how payments are collected and arrears are dealt with] before I'd put a cent into it.
I read, accepted and thanked the comments then you come in with 'fairy godmother' and the like. I put the AIB no tax on profits forward as an area to be looked at before looking to cut state aid to the most vulnerable. I've been accused of lying and received your brand of derision for my troubles.
You explained why you don't like social housing and mentioned rent arrears. That's not a possible solution or idea for were we should be looking for any funding.
A good idea badly policed, shouldn't be scrapped IMO.
Again, even including any arrears do you think paying private landlords, selling properties at a loss to vulture funds for them to rent back to us, giving cheap loans to developers, buying homes at market rate for use as social housing and using hotels and B&B's as an 'emergency' is the better way to go for the tax payer?0 -
Matt Barrett wrote: »I read, accepted and thanked the comments then you come in with 'fairy godmother' and the like. I put the AIB no tax on profits forward as an area to be looked at before looking to cut state aid to the most vulnerable. I've been accused of lying and received your brand of derision for my troubles.
You explained why you don't like social housing and mentioned rent arrears. That's not a possible solution or idea for were we should be looking for any funding.
A good idea badly policed, shouldn't be scrapped IMO.
Again, even including any arrears do you think paying private landlords, selling properties at a loss to vulture funds for them to rent back to us, giving cheap loans to developers, buying homes at market rate for use as social housing and using hotels and B&B's as an 'emergency' is the better way to go for the tax payer?
Why shouldn't we be looking at rent arrears as a source of funding?
I have put forward the idea of increasing LPT as a source of funding because those who have houses will be helping those who have not. Similarly, pursuing rent arrears to fund social housing is the same principle.0 -
I never said I supported those either though.Matt Barrett wrote: »Matt, you're the very person who kept bringing up AIB, but when the details and nuances of it are explained to you it's people trying to divert the discussion.
I've outlined why I think social housing - the local government had a vested interest in not running the system correctly. I would be reluctant to fund a project which I view a ready made poverty trap. I would require a massive overhaul of social housing[particularly how payments are collected and arrears are dealt with] before I'd put a cent into it.
I read, accepted and thanked the comments then you come in with 'fairy godmother' and the like. I put the AIB no tax on profits forward as an area to be looked at before looking to cut state aid to the most vulnerable. I've been accused of lying and received your brand of derision for my troubles.
You explained why you don't like social housing and mentioned rent arrears. That's not a possible solution or idea for were we should be looking for any funding.
A good idea badly policed, shouldn't be scrapped IMO.
Again, even including any arrears do you think paying private landlords, selling properties at a loss to vulture funds for them to rent back to us, giving cheap loans to developers, buying homes at market rate for use as social housing and using hotels and B&B's as an 'emergency' is the better way to go for the tax payer?0 -
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Why shouldn't we be looking at rent arrears as a source of funding?
I don't know, who said we shouldn't? Any arrears should be recouped IMO.I have put forward the idea of increasing LPT as a source of funding because those who have houses will be helping those who have not. Similarly, pursuing rent arrears to fund social housing is the same principle.
I saw that.I never said I supported those either though.
It doesn't have to be a war of sides. You can not like social housing and the above.
The idea was put forward that social housing could be a solution. The issue of funding was raised. Looking to the most vulnerable was put forward. You said you don't like social housing. Any ideas outside of social housing? We cannot continue as is. It's not working.0 -
Matt Barrett wrote: »I don't know, who said we shouldn't? Any arrears should be recouped IMO.
I saw that.
It doesn't have to be a war of sides. You can not like social housing and the above.
The idea was put forward that social housing could be a solution. The issue of funding was raised. Looking to the most vulnerable was put forward. You said you don't like social housing. Any ideas outside of social housing? We cannot continue as is. It's not working.
Define the most vulnerable? Who are they?0 -
Define the most vulnerable? Who are they?
The 2 million people on medical cards are the most vulnerable?
The problem in Ireland is that we go to the same well every time - the productive half of the population.
It is not possible to increase taxes without increasing the tax burden on the lower-paid as well as the rest.0 -
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I know people with 500k financial assets, excl house, with full med cards.
They are not vulnerable.
But they are not typical of people with medical cards - not even slightly.
There are two types of medical cards - those under 70 and those over 70.
Under 70 - they use net income, and you need to be below a very low threshold to qualify.
Over 70 - they use gross income before tax and it has to be below €900 pw for a couple which is €46,800 pa, which is not a bad income. Capital is counted based on the interest earned. Current interest rates are near zero.
There are groups who get a medical card as of right irrespective of income.0 -
The 2 million people on medical cards are the most vulnerable?
The problem in Ireland is that we go to the same well every time - the productive half of the population.
It is not possible to increase taxes without increasing the tax burden on the lower-paid as well as the rest.
I dont buy that they are the most vulnerable. The f*cking stress I see from low paid workers in Dublin, paying E60 to go to a gp, stress of work, commuting, housing situation. They are the bloody vulnerable!
with regards to social housing and funding it, the first stop would be massively increasing what is paid for it by tenants and reduce the welfare they receive directly, if you think they will pay the money after they have been given the cash LOL! Make the houses very energy efficient, bills will be very little then.0 -
Define the most vulnerable? Who are they?
People the state deems in need of tax payer funded state aid, the poor, sick, elderly, the working tax payer who can't get by. Who do you think it is and do you have any input in regards of social housing being a better alternate to what we have now or how we might find funding?
Ran out of road with AIB onto the definition of most vulnerable, beats discussing the housing crisis I suppose.0 -
Idbatterim wrote: »I dont buy that they are the most vulnerable. The f*cking stress I see from low paid workers in Dublin, paying E60 to go to a gp, stress of work, commuting, housing situation. They are the bloody vulnerable!
with regards to social housing and funding it, the first stop would be massively increasing what is paid for it by tenants and reduce the welfare they receive directly, if you think they will pay the money after they have been given the cash LOL! Make the houses very energy efficient, bills will be very little then.
People like to tell tales about dutch gold and lifers. The crisis involves a hell of a lot of good hard working people who can't make ends meet and rely on state aid. Going after these people to fund social housing is a nonsense. If the state is mismanaging our money by giving it to those who don't need it, that's on the state to learn how to manage it's job.
They found an est. 32m for the Pope's gig all the same. Magic money tree? Optics are terribly important I suppose.0 -
Matt Barrett wrote: »People the state deems in need of tax payer funded state aid, the poor, sick, elderly, the working tax payer who can't get by. Who do you think it is and do you have any input in regards of social housing being a better alternate to what we have now or how we might find funding?
Ran out of road with AIB onto the definition of most vulnerable, beats discussing the housing crisis I suppose.
How does the state deem people in need of taxpayer funded state aid?
Is this a transparent process? Is it fair? We can't just take it as a given.
All state aid programmes from social welfare to social housing to education to medical cards should be reviewed every few years and changes made.0 -
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How does the state deem people in need of taxpayer funded state aid?
Is this a transparent process? Is it fair? We can't just take it as a given.
All state aid programmes from social welfare to social housing to education to medical cards should be reviewed every few years and changes made.
This comes up as a derailment any time something uncomfortable for government is raised. In short, it's been covered.
Agreed they should all be vetted and policed. Another failure for Leo. He's top man now, so what evs.
Even with current arrears, do you think social housing is a better alternative to selling off homes cheaply to have them rented back to us, renting off private landlords, giving cheap loans of tax payer money to developers and buying homes at market rate to use as social housing?0
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