JIM MITCHELL, TD,
Sir, - I refer to your Editorial "Options, not Auctions" (January 23rd), to An Irishman's Diary of the same date, and to your report quoting the Minister for Finance, Mr McCreevy.
In the latter case the Minister said: "Fine Gael's proposal is tantamount to saying that people should receive tax relief for losing money at the races." The first point I would like to make is that the Minister has given abundant tax relief to those who bet at races. Secondly, the Minister is already giving tax relief for share losses to corporate, institutional and wealthy individual shareholders, all of whom can offset their losses on Eircom against other capital gains to the tune of 20 per cent. How does the Minister defend this gross injustice to the ordinary taxpayer? I would also ask The Irish Times how it can justify its editorial line which by implication supports relief for the wealthy but refuses the same relief to the ordinary taxpayer.
Fine Gael raised this issue in the Dáil last October and November. The Leader of the Opposition, Michael Noonan TD, asked the Taoiseach "in view of the exceptional role of the Government in the Eircom flotation if he would extend the same relief to the ordinary taxpayer as is already available to very prosperous individuals and institutions?"
In a statement on November 21st I indicated the costings of this proposal. The total investment of individual shareholders in Eircom was €1.65 billion. Having made allowance for the Vodafone shares, the estimated decline in value is 27.5 per cent, equal to €453 million. Therefore, a tax credit on the standard rate of income tax is equal to a maximum of €90 million.
In the case of institutional shareholders their investment was of the order of €2.6 billion. Their shares also lost value of 27.5 per cent, which equals €715 million. They have already been able to offset this loss against other taxable profits which exceed €140 million. And they didn't even have to go to the races!
One of the main points which will differentiate the present Government from the alternative Government in the forthcoming General Election will be the alternative Government's unambiguous commitment to fairness and social justice. This proposal stems from such an approach.
Finally, the €90 million is the maximum that this Fine Gael proposal will cost and it is a modest price to pay when you consider that, unknown to the general public at the time, the Fianna Fáil-PD Government pushed up the flotation price of Eircom shares above that recommended by the board and then spent £74 million hyping up the flotation.
The general taxpayer benefited to the tune of €4.2 billion. The State has already compensated the institutional investors and it defies fairness that the same concession should not be made available to the ordinary taxpayer.
In the case of income tax payers, Fine Gael makes it clear that this is a once-off measure to redress an injustice by the State on smaller, inexperienced investors and will have only a once-off cost. On the other hand, rich investors have always been able to write off their speculative losses against their other tax liabilities without a word from The Irish Times or the Minister for Finance. - Yours, etc.,
JIM MITCHELL, TD, Deputy Leader of Fine Gael and Shadow Minister for Finance, Dáil Éireann, Dublin 2.