The Government's decision to give unprecedented powers to the Revenue in the Finance Bill, published last evening, will be welcomed by the compliant taxpayer whose patience, at this stage, is wearing thin. It is a welcome signal that the State is at last giving tax evasion the priority it deserves. The Government has no credible alternative to introducing thorough-going reform of the tax law. The long sequence of tax scandals from Ansbacher to National Irish Bank (NIB) and beyond has exposed the inadequacy of the existing tax regime. While all citizens are supposedly equal in the eyes of the Revenue, the hundreds of millions of pounds sloshing around in non-resident bank accounts and special tax shelters are ample evidence of how some are more equal than others. The reality is that there there is an entrenched culture of tax evasion, a strong sense, as the New York hotelier Leona Helmsley observed, that only the little people pay tax. The fact that no tax penalty has been imposed on Mr Charles Haughey in relation to the monies he received from Mr Ben Dunne confirms this impression.
The level of tax evasion is scarcely surprising; the tax amnesties introduced by Fianna Fail in 1988 and 1993, described as a "charter for cheats", actively encouraged tax evasion. The Revenue already have significant powers but the generally lenient manner in which tax evaders are treated by the Commissioners, by the courts and by the political system has also helped the wrongdoer. The Revenue's investigative vigour has improved appreciably in recent years but, as far as known, only one custodial sentence (and that a two year suspended term) has been imposed in this State for tax evasion And we are still waiting, despite the evidence of widespread tax evasion, for a Lester Piggott-style case where a high-profile individual experiences the full rigour of the law.
The actual impact of the measures announced yesterday will become clear over time. But they do appear to represent a significant strengthening of the Revenue's powers. Critically, it appears that the Revenue, if suspicious of tax evasion, will have the powers to conduct a general trawl through the relevant accounts, instead of having to establish a prima facie case before the courts. The new powers to investigate suspicious non-resident accounts are especially welcome; a situation in which AIB alone held 53,000 bogus non-resident accounts and where NIB appeared to promote off-shore bonds as a means of avoiding tax brings the tax laws into disrepute. The new powers in the Finance Bill are an attempt to restore the badly depleted levels of public confidence in our tax laws. It is to be hoped that they will succeed in bringing some kind of order - and a stronger level of fairness - to our taxation system.