Irish junior coalition party would more than treble bank levy

DUBLIN, Feb 8 (Reuters) - Ireland (Other OTC: IRLD - news) 's junior government party wants to more than treble a levy on the country's banks if it is re-elected this month, the Labour Party said on Monday, splitting from its senior partner which would maintain the current level.

The Fine Gael/Labour coalition, whose constituent parties are seeking re-election together on Feb. 26, introduced the levy that yields 150 million euros ($167 million) a year in 2014 and last year extended it until 2021, but chose not to increase the amount the sector would pay each year.

On Monday, centre-left Labour proposed increasing the levy by 350 million euros and said it would keep it in place at that level until the banks had fully run down their tax loss reserves and resumed paying corporate tax "at a normal rate".

"Obviously the banks have taken enormous losses and they can write off those losses in perpetuity. That's not right that they would be paying no corporation tax in the future. We need to ensure that they pay their fair share," Ireland's spending minister Brenda Howlin of Labour told a news conference.

A spokeswoman for Fine Gael said its position remained the same as what was outlined by Finance Minister Michael Noonan last year when he extended the levy but kept the overall yield unchanged.

Fine Gael has a comfortable lead in all opinion polls around or just below 30 percent, while Labour is at or below 10 percent, meaning that if the two can win enough added support to return to power, Fine Gael would be the clear senior member.

Diarmaid Sheridan, an analyst at Davy Stockbrokers, said an increased levy would have a negative impact on the valuation of the government's planned sale of a 25 percent stake in 99-percent state owned Allied Irish Banks (Berlin: 30544177.BE - news) , if re-elected.

($1 = 0.9004 euros) (Reporting by Conor Humphries and Padraic Halpin; Editing by Mark Potter)