By Andrew Bushe
DUBLIN — Thousands of people who lost about a third of their investment in the Eircom stock flotation have been promised partial compensation with a tax write-off by Fine Gael leader Michael Noonan.
Noonan said the privatization of the former state telephone company in 1999 was a “con job” and if Fine Gael is in power after the next election it would bring in the compensation deal.
It is estimated it would cost about euro 80 million.
Investors already involved in share dealing or the sale of assets can offset their losses against capital gains tax but Noonan’s plan will allow others to write them off against income tax at the basicc rate.
It would mean that people would be able to claim tax credits equivalent to 20 percent of what they lost.
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An unprecedented 574,082 people bought Eircom shares. Many people borrowed money believing they could not lose. The shares were launched at euro 3.90 at the height of the telecom craze and went up to euro 5.10 before beginning their descent.
Last year, the company’s mobile arm was sold to Vodafone in a share swap deal and the fixed-line business was take over by the Tony O’Reilly-led Valentia consortium.
Fianna Fail has accused Noonan of electioneering, but has responded by saying it will be a once-off to recognize a wrong done to the less well off.
Noonan said all he was doing was allowing ordinary PAYE taxpayers claim the same as was allowed to capital gains payers.
“What’s sauce for the goose, is sauce for the gander,” Noonan said. “If somebody can have an offset when its capital gains tax in question, why can’t they have an offset for income tax when it’s a once-off situation? It is not an enormous amount of money involved — _60-65 million.”
Noonan said that apart from recognizing the “wrong that was done by the government” by hyping the shares as a sure thing, his tax-relief program might attract people into buying shares in other state companies that might be floated.
“I don’t think a single shareholder who got burned in Eircom will buy a share in a state company again unless something is done,” he said. “So as a matter of national policy as well as compensation, I think it is very important to restore confidence.”