Michael Moynihan (Cork North West, Fianna Fail) | Oireachtas source

I thank the Chairman for allowing Members of the Oireachtas who are not members of the committee to contribute and I thank the Revenue Commissioners.

My colleagues have put the case very strongly. This is a fundamental issue in the farming community and for the recipients of the 400 letters sent out in November. There can be no disputing that the wording of the letter was very heavy-handed and there was no sense of fair play in the way the letter was dropped into their letter boxes that Monday morning. I do not want the witnesses to comment on this because that is exactly how it is seen.

I wish to raise a few matters. In the conclusion of Mr. Phelan's opening presentation he referred to the possibility that the test case may differ from what the Revenue Commissioners believe it to be. Therefore, he has some doubt as to whether the test case may be different. In response to Deputy Brassil's point, Mr. Phelan referred to the possibility that Revenue may be right or wrong. This leads me to believe there is an issue that the Revenue Commissioners are not fully certain of their ground. If this be the case, it has implications for what Senator Kieran O'Donnell requested, namely, having a test case fully tried before anything happens. There should have been a test case and Revenue should have been 1000% certain of its ground before any letters were issued. On two occasions this afternoon Mr. Phelan has alluded to the possibility of some doubt in this regard. Why is it that in the case of a farmer who had these shares and sold them for a variety of reasons, this is sent through Revenue, which then collects the 33.33% capital gains tax and duly thanks the farmer? Kerry shareholders sell their shares, the capital gains is collected, the tax clearance certificate is issued and, lo and behold, Revenue states it is looking into the matter. One could say this has been going on for decades; it has certainly been going on for years.

I am led to believe that in a different circumstance, in which shares in a co-operative movement were sold and a test case taken to the Revenue Commissioners as to whether they should be taxed as income tax or capital gains, the Revenue Commissioners stated very clearly and definitively that they would have to be taxed as capital gains tax. I understand there is an appeal case before the Revenue Commissioners to the effect of the opposite of what the witnesses are stating is now the case. I understand an individual taxpayer has an appeal case stating that his shares, which he sold and on which he paid capital gains, should have been taken in as income tax. However, Revenue in the first instance has refused the case so, as I understand it, the witnesses are completely contradicting what he so strongly defended or determined in another case. I would like to know why this is the case. As I and many of my colleagues know full well, a number of farmers are prepared to make an assessment and then takes it to the Tax Appeals Commission. The question I put to the witnesses is if one person takes an assessment and then takes it to the Tax Appeals Commission, does the clock stop for every other farmer? The Revenue Commissioners have been empowered and entrusted with a whole pile of rules and regulations since the inception of the State and have been applauded for what they have done in various circumstances. Surely to God it behoves them, if there is a scintilla of doubt in their minds - I am in no doubt but that there is - to stop it until a test case determines what the position is.

The other point I put to the witnesses is that if a farmer gets his Kerry share, surely to God the income from that share only becomes an income the day he sells it. It is a piece of paper until that date. The Revenue Commissioners readily collects the 33.33% in capital gains prior to his selling it. If for 2017, for argument's sake, the share price drops 20% or 10%, how can the Revenue Commissioners make a valuation of a share that may be 20% less the following year? It does not make sense. Not to bore the committee, but the first point is that there must be a test case. The witnesses have alluded to the possibility that Revenue may be right or wrong and to the fact that if a different opinion comes out of the appeal case, the status quo remains. Therefore, they have a doubt about it. Why not put everything on hold until this is cleared up beyond doubt?