Jerry Cowley (Mayo, Independent)

I welcome the opportunity to speak on this Bill. We would all wish for the best for our own areas and we all know how many jobs the Irish Financial Services Centre has brought to Dublin. That is the problem — the west has not been offered the employment opportunities that exist in other areas.

I have often spoken about the need for a tax incentive scheme for the west, particularly Knock Airport. The Government is talking about the number of people using Dublin Airport increasing to 38 million from the present figure of 17 million, and discussing a third terminal. There is a terminal on the west coast at Knock Airport that is strategically located and could take many of those people away. It is projected that 500,000 will use it this year, compared to 17 million using Dublin Airport. It does not make sense to build more terminals at Dublin Airport, it would be better to develop the terminal at Knock Airport and think about building a second terminal there.

The situation in Knock should be recognised by Government, with investment there underpinned by a tax incentive scheme. There should be a financial services centre at Knock Airport to achieve balanced regional development.

I do not condone tax dodging, everyone should pay his or her fair share. There is, however, currently an anomaly where people in their 70s and 80s are being unfairly included in a trawl by the Revenue Commissioners where their aggregate investment in insurance company schemes exceeds €20,000. This Bill deals with provisions for investment funds but it is connected with people who invested in good faith. In many cases the initial investment was very small, around €2,000, but the fund grew over the years due to re-investment in other insurance companies by the investment manager. He took this money and moved it around on people's behalf. The small investment grew rapidly in the late 1970s and 1980s, with gains of 30% per annum. The accumulation of money from that re-investment by investment managers has driven many thousands of older people into the tax net who would not be liable based on the original amount invested. In many cases the original amount cannot be traced due to many of the original insurance companies going out of business, such as Norwich Union, Royal Life and Abbey Life.

While everyone must pay his or her share of tax, it is grossly unfair that the Revenue Commissioners are going back 25 years to go after small people who invested small amounts of money. No tax may be owed but, as is often said, old people who have no tax worries are the ones who worry most. Older people tend to worry about money and making ends meet. Now this terrible load has been put on them. It will be argued that if they have no tax to pay, they have nothing to worry about.

Many of these older people who took out insurance policies must make a declaration to the Revenue Commissioners by 23 May. A quarter of a century ago, people would put aside a few bob for a rainy day. Those individuals are now expected to account for all the original investment. How many Members can remember transactions from 25 years ago? This is unfair treatment of older people in their 70s and 80s, particularly when the Government will use the statute of limitations. It will impose a limit of six years for its liability to limit payments to older people while still engaging in a tax trawl of 25 years to investigate older people for minimal investments.

In the mid-1970s when these investment type products were launched, the largest supplier and market leader was the State-owned Irish Life Assurance. Before 2001, the glossy brochures stated under the heading "tax" that all returns from the product were taxed at 24%. Irish Life claimed it paid the tax for the client. When the product was cashed in, there was no other tax for the client to pay. After 2001, the brochures stated that due to changes to exit tax provisions by the former Minister for Finance, Mr. McCreevy, the tax due was calculated at a standard rate of tax applicable at the time of encashment plus 3%. Hibernian Life and Pensions Limited stated in its brochure that it would deduct this tax and pay it to the Revenue Commissioners on the client's behalf. Many elderly people, particularly in the west, find themselves in this situation. The Government did well out of these products as it received the tax on the gains over the years. However, now it is pursuing the initial investment. This money was used in these investments to build property on the east coast. The Government has already got its pound of flesh out of older people.

I am not in favour of letting anyone who avoids tax off the hook. I do not condone the actions of those who invested large sums of money to avoid tax. However, the thousands of small investors, thinking of the rainy day, have been treated unfairly. They are being treated in the same way as the large tax dodger with the same penalties, possible prosecution and naming and shaming. These are the small farmers who supported Fianna Fáil in the past but will no longer do so.

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