The Government has been accused of overseeing a two-tier tax system after it emerged that the Revenue has netted €34 million in capital gains tax this year from 132,000 former shareholders of First Active.Labour Party finance spokeswoman Ms Joan Burton said

the figures were typical of a tax system where the rich can pay little or nothing while ordinary workers are left paying tax at the full.

The figures were disclosed by the Minister for Finance, Mr Cowen, in reply to a parliamentary question from Ms Burton.

Ms Burton said she had been approached by a number of small shareholders who were surprised that losses they had incurred on the purchase of Eircom shares were not deductible against their First Active tax bill.

In fact, losses from the purchase of Eircom by the Valentia consortium headed by Sir Anthony O'Reilly have already been offset against gains made by First Active shareholders last year when the company paid shareholders €1.12 for every share they held in a capital reduction scheme.

Other losses from the original Eircom deal lie in the reduced value of Vodafone shares received in exchange for Eircom's mobile phone service, Eircell.

However, many investors still hold these shares, meaning they have not realised losses to set against the First Active gains from the sale of the company at €6.20 a share to Royal Bank of Scotland.

Ms Burton compared the experience of the shareholders with recent cases where several people with multi-million euro gains became non-resident tax exiles to avoid paying anything to the Revenue.

She called on the Minister to use next week's Budget to introduce transparency and accountability in respect of the tax shelters and avoidance mechanisms that she said now dominated the tax system.