Update 9.39pm: Finance Minister Paschal Donohoe has revealed he spoke to AIB chairman Richard Pym on Monday morning to discuss the bank's inclusion in the so-called Paradise Papers, writes Daniel McConnell.
Speaking at the Finance Committee today, Mr Donohoe said on reading the revelations in the newspapers he “lifted the phone” to both the Revenue Commissioner and to Mr Pym to voice his concerns.
He said Mr Pym went through what happened and is likely to update the minister in due course.
Mr Donohoe rejected Opposition criticisms that he as the major shareholder in AIB has taken a hands off role in the scandal which involved tax avoidance arrangements for wealthy customers.
Mr Donohoe said he was told such entities within AIB have been ceased and he said he welcomed that development.
“There is not a standoff in my behaviour. That is why I lifted the phone to the chairman yesterday.
Those entities were shut down and I am glad they were,” he said.
Earlier: Finance Minister Paschal Donohoe has rejected claims that he has followed his predecessor Charlie McCreevy by cutting income tax and relying on property related taxes like stamp duty.
Speaking at the Oireachtas Finance Committee, Mr Donohoe said that the Budget he announced broadened the tax base and he increased public spending only marginally.
However, he was challenged by Sinn Fein's Pearse Doherty who said his decisions were not fiscally prudent.
“This is exactly from the McCreevy script. These are not things to be banking upon for the long term. It isn't a prudent fiscal stance,” Mr Doherty said.
Mr Donohoe said: “I reject entirely any suggestion that the measures I have introduced are anything like what happened before the crash.”
Mr Donohoe said the high marginal tax rate is Ireland is a “drag on employment” and he said he wants to change it.
He said Ireland is an “outlier” in the OECD group of 27 developed countries in that average income earners begin to pay the higher rate of tax at just €33,800.
Mr Donohoe was responding to questions from Opposition TDs at the Finance Committee which was discussing his Budget day tax cuts.
Sinn Fein's Pearse Doherty said there is no evidence to suggest that Ireland's marginal tax rate negatively impacts on employment, saying this is merely Fine Gael on a tax cut agenda, despite “people dying on our streets because of homelessness.”
Mr Donohoe responded by saying how can Mr Doherty describe the budget as a tax cutting budget when it raised taxes in areas other than income tax by €750 million.
“You might disagree with my decision to cut taxes, but this budget is a revenue raising budget,” Mr Donohoe told Mr Doherty.
Mr Doherty argued that investing in childcare would have a far greater impact on employment and quoted evidence from the ESRI before the committee last year to make his point.
Mr Donohoe said he is opposed to removing more people from the tax net, insisting he will target the marginal rates instead.
“I am not looking to put in place any tax reduction that we are not able to pay for in the future.
"I am looking to expand the tax base,” he said.
Mr Doherty says Ireland fares badly when compared with other countries when it comes to our “tax wedge”.
“We have marginal tax rates that are very high to other OECD countries. We enter the higher tax rate at a low level. I don't believe it is fair that people on average wages pay the higher rate of tax and over time I intend changing that,” Mr Donohoe said.
Mr Donohoe said people on relatively high salaries also have high liabilities and commitments such as childcare and high mortgages.
Mr Donohoe said that those people who earn up to €70,000 who he said fall into the middle income category, can still be subject to “an awful lot of pressure”.
In response, Mr Doherty said that by that logic rich people with high living costs could be considered middle income earners.
“If Denis O'Brien buys a yacht does he become a middle income earner?” he asked.