Nat O'Connor: One of the interesting minor features of the Finance Bill 2010 is that certain changes were made to Irish law to make it easier for banks following versions of Shari'a/Islamic law to operate here. The need for change is that Shari'a regards charging interest on loans to be a sin: usury.
One commentator in the Irish Independent (Friday 5 Feb 2010, p.11) made a mistake in claiming that: "The Finance Bill contains measures to tax Islamic financial transactions in a similar way to Christian finance."
The mistake is that, clearly, there is no such thing as "Christian finance". The law that governs finance in Ireland is secular, and passed by the Oireachtas. In recent years, the Finance Bill has become a highly complex document filled with references to the annually modified original law. It weighs in at 230 pages this year and makes the Lisbon Treaty look like bedtime reading. These are the rules that hide numerous tax loopholes and special arrangments that successful lobbyists have persuaded successive governments to include. These are also the rules that continue to permit extortionate, exploitative borrowing. For example, legal moneylenders here can charge over 100 per cent on loans.
Theological scholars will also be quick to point out that Christians, including several popes, also outlawed usury over the ages. Plato and Aristotle condemned usury, and Ancient Rome capped interest at 8.33 per cent (see Jonathan Freedland's interesting article on usury in the Guardian).
In Ireland, Section 35 of the Finance Bill 2010 allows certain payments by Islamic banks to be treated as interest for tax purposes. (The explanatory memo gives quite clear details about this). This is welcome, in so far as it allows more international commerce and it is of benefit for Muslims living in Ireland (and others) who would like to avail of alternatives to interest. However, tinkering with the small print of the labyrinthine finance legislation will simply allow these banks to operate in parallel to our existing norms.
We are long way away from reigniting the argument here on how much is reasonable profit from a loan, and at what point does exploitation (usury) begin.