Jerry Cowley (Mayo, Independent)

I do not condone the dodging of tax. Everyone should pay his or her fair share of tax. However, there is currently an anomaly where older people in their mid-70s and mid-80s are being treated unfairly in a trawl by the Revenue Commissioners where their aggregate investment in insurance company schemes exceeds €20,000.

Is the Minister aware that in many cases the original or initial investment was very small, for example, £2,000 and that this fund has grown due to reinvestment in other insurance companies by the investment manager? Investments grew rapidly in the early years, achieving 30% growth per annum. The accumulation of money from that reinvestment by investment managers has driven many thousands of older people into the tax net now, whereas they would not be liable based on the original amount invested. In many cases the original amount cannot be traced due to the fact that many of those original insurance companies have gone out of business, for example, Norwich Union, Abbey Life, Royal Life, CGNU etc.

While I agree that everyone should pay his or her fair share of tax, is it not unfair to go back 25 years considering the small amount of the original investment in many cases, particularly as no tax may be owed at all in some of these situations? The Minister may say they need not worry, but older people worry and do not eat or sleep. This issue is causing terrible worry and consternation among older people with such insurance policies and who must make a declaration to the Revenue Commissioners by 23 May 2005.

A quarter of a century ago people put a few bob aside for the rainy day. Now they are expected to be able to account for all of the original investment. This seems unfair treatment for older people in their mid 70s and 80s, considering that the Government is using the Statute of Limitations to its liability to nursing home payments to older people to six years. However, it has no trouble going back 25 years to get older people into its net in this situation.

These investment type products were launched in the mid-1970s. The biggest supplier and market leader was Irish Life Assurance Company, which was State owned. Pre 2001, the glossy brochure inducing people to join stated: "Tax — All returns from [this product] are taxed — currently at 24%. We pay this tax for you so then when you cash in your [product], you have no further tax to pay." Post 2001, due to the change to exit tax by former Minister for Finance, Deputy McCreevy, the brochures stated:

Exit tax is calculated as standard rate of tax applicable at the time of encashment plus 3%. Hibernian Life & Pensions Limited deducts this tax and pays it to the Revenue on your behalf.

Many older people in the west are affected by this measure. The Government is doing well from it. It got tax on the gains over the years and the money was used to build property on the east coast. The Government has already got its pound of flesh. I am not in favour of letting off the hook anybody who has invested large amounts of money in order to avoid tax. However, thousands of people are affected by this Revenue trawl, mainly the small investors who made provision for the rainy day. They are being treated unfairly, like big tax dodgers. They face the same penalties and are liable for possible prosecution and naming and shaming. Many of them were on small farmers dole payments and were not liable for tax. When they got a few bob on the headage, it was put aside for the rainy day or children's education. They paid their tax on the gains.

The people in the Revenue Commission do not seem to know or care that there is inherent unfairness in this measure. People who do not have money to pay fines are worried sick and quite desperate. Perhaps there are cases where tax should have been paid, but the person was not in the tax net at the time. Now, 25 years later, the Government is looking for this money. Whose fault is it these people were not in the tax net? The difficulty with trying to get these people to pay tax 25 years later is that those involved are now in their 70s and 80s. They are scared out of their lives and afraid to talk to anyone. Some may have phoned the Revenue Commission line, but many are afraid to do so. However, by the end of the week they will have to make a declaration to the Revenue Commission as to whether they have paid tax on this insurance investment. Many are unsure about that. Even if they were sure they had paid, many of the companies have gone out of business. If they do not make a declaration to the Revenue Commission, they will be liable for even greater penalties, naming and shaming and possible prosecution as well as persecution.

Will the Minister intervene with the Revenue Commission on this issue? Why should the trawl go back 25 years? Why should the lower limit of the threshold be €20,000? Something must be done. Entire life savings are being wiped out. Can the Minister help?

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