TAOISEACH BRIAN Cowen has rejected Labour Party claims that the Government did a “sweetheart” deal with the so-called “Golden 10” Anglo-Irish Bank borrowers to allow them avail of an €80 million capital gains tax loophole.
Labour leader Eamon Gilmore demanded that the Government “close off a tax loophole that will cost the taxpayer in the order of €80 million on top of the €300 million we’re already stuck with” for the losses on the loan “that these guys took out”.
He appealed to the Taoiseach that before the Government cut child benefit, social welfare and instituted pay cuts, “will you not close off this loophole first? Why should there be one law for these people who are operating in a sweetheart arrangement, that they get a tax write-off for losses that are already being borne by the taxpayer? It’s madness”.
But Mr Cowen, who accused the Labour party of changing its arguments, insisted “it’s not correct to suggest that there’s a particular deal with these people at all. It’s not the case”. He said the capital gains tax code was “predicated on gains being made”.
He said the “big complaint” and the “whole argument” Labour had been making in relation to the Nama legislation was the level of discount in the value of the assets being transferred from the financial institutions.
“The argument now is that there’s actually being gains made in respect of those assets, which is not the case. In fact the opposite is the case.” Mr Gilmore said the “Golden 10” were “the guys who were loaned the money by Anglo Irish Bank to buy the shares in Anglo Irish Bank in order to bail out the bank and to bail out an even bigger shareholder”. The taxpayer “got stuck with the bulk of that loan” – €300 million.
Labour finance spokeswoman Joan Burton had raised the issue with Minister for Finance Brian Lenihan and told him “not only are we stuck for the loss of the loan but that these guys can write off the losses of the entire amount against their future capital gains tax liabilities”, and do so indefinitely.
Mr Gilmore said she asked the Minister to do something about it but he said, “I have no plans at this stage to make a change in this area. He said the ‘current symmetry of treatment between losses and gains would be affected and it would represent a significant change to our capital gains tax legislation’. ”
Mr Gilmore added: “Well of course it would and a very necessary change in our capital gains tax legislation.”
The Taoiseach, however, insisted: “Specific issues that arise in the banking situation that will of course be dealt with on the basis of whatever debts are due and owing will have to be paid”. Any transfer to Nama “still doesn’t exclude that liability that people owe to financial institutions in respect of any debts that they have”.
