Revisiting tax amnesty is only route to justice

In the review of their joint Programme for Government, Fianna Fail and the Progressive Democrats this week declared their determination to pursue tax evaders and to try to recover money that was improperly withheld from the Exchequer through bogus non-resident accounts and scams like Ansbacher Cayman. This is welcome news. And if the Government is serious, there is a very direct way to prove it. Fine words about justice will mean anything only if they are followed by decisive action to overcome the most obvious obstacle to any attempt to ensure that the evaders do not get away with it - the 1993 tax amnesty. Time and again, that amnesty has been cited as the line beyond which justice cannot go.

Goodman International, perpetrator of what was then the biggest tax scam uncovered in the State, availed of the amnesty just when it seemed that it would have to pay huge sums to the Exchequer. The banks and the Revenue Commissioners, in their often conflicting evidence to the DIRT inquiry, agreed on one thing - that the amnesty coloured everything. We do not yet know whether any of those involved in the Ansbacher Cayman scam used the amnesty.

Most people in the political system will now admit that the amnesty was a terrible mistake. That admission costs little and lets everybody off the hook. We can all shake our heads and say "If only the amnesty wasn't there, we could get to these people once and for all." The dirty job of tackling powerful people can be left to one side with a sigh of deep remorse.

But here is the news - the amnesty is not necessarily fixed in place forever. There are good reasons for supposing that it can be undone. Anyone who read the Department of Finance's memorandum for government on the amnesty, which emerged from the Public Accounts Committee DIRT hearings, will have noticed one extraordinary fact: the government's legal advice at the time was that the amnesty was probably unconstitutional.

In the copy of the memorandum made available to The Irish Times, a section headed "legal advice" was left blank, so we do not know in detail what that advice was. But we do know its broad thrust. Early in the document (the full text of which is available at the Irish Times web site) there is a mention of "the advice from the Attorney General's office that any incentive involving a remission of tax properly due would be open to successful challenge on grounds of unconstitutionality". This seems to indicate that the attorney general - himself a constitutional officer - told the cabinet that the amnesty was probably unlawful.

The Department of Finance, moreover, even went to the trouble of getting outside opinion from some unnamed "prominent tax practitioners". One of them "volunteered a non-legal opinion that a remission of tax would be unconstitutional". This, again, offered independent confirmation of the attorney general's view that a challenge to the amnesty on constitutional grounds would have a good chance of success. So before it agreed to bring in the amnesty, the Fianna Fail/Labour coalition knew that it was probably in breach of the State's basic laws.

Now the interesting thing about the operation of the Constitution is that a law doesn't become constitutional simply because it has been passed, implemented and unchallenged. Article 15.4 of the Constitution is quite explicit - a law that breaks the constitutional rules is simply not a valid law.

It says: "The Oireachtas shall not enact any law which is in any respect repugnant to this Constitution or any provision thereof. Every law enacted by the Oireachtas which is in any respect repugnant to this Constitution or to any provision thereof, shall, but to the extent only of such repugnancy, be invalid."

Thus the Constitution explicitly envisages a situation in which a law might come into force which would in fact be utterly null and void. The system works under a general "presumption of constitutionality" - the assumption that no Government would knowingly pass an Act contrary to the basic framework of the State's laws.

But in this case, it seems clear that that basic assumption was unfounded. The basis for the attorney general's advice suggesting the amnesty was probably unconstitutional is not hard to imagine. The High and Supreme Courts have consistently taken a dim view of laws which seek to discriminate between citizens in their dealings with the State.

The amnesty was a flagrant act of discrimination, effectively relieving some citizens of their financial obligations purely on the grounds that they had hitherto evaded the law. You don't need to be a constitutional lawyer to suspect this might not stand up in court. Common sense - admittedly not always the best guide in legal matters - would suggest a legal challenge to the amnesty would probably succeed.

What is not quite so clear is whether the courts would insist that such a judgment would have to operate retrospectively, effectively undoing all deals that were done under the amnesty in 1994. So far as I know, the case law is somewhat inconsistent, with the courts sometimes suggesting an invalid law is void from the start and sometimes suggesting it is void only from the moment it is actually declared unconstitutional.

But the broad thrust of the Supreme Court tradition seems to be that if a law is unconstitutional, then it is invalid full stop, whatever the consequences. The court's leading theorist, Mr Justice Brian Walsh, suggested in a landmark case in 1972 that the court could not have regard to the awkwardness that might follow if a longstanding law were struck down: "The implications might be thought to be frightening, but whether they are frightening or not has nothing to do with the task which falls upon this court. If an infringement of the Constitution were to continue long enough, the cost of correcting it might be great but that is not a reason for perpetuating it."

The cost of correcting the probable infringement of the Constitution by the tax amnesty might be a lot of trouble for a lot of people. But it's a cost that the Government, if it means what it says about pursuing the evaders, must be prepared to pay. It comes down to a simple test. If the Government is serious, it will ask the Supreme Court to rule on the constitutionality of the amnesty. If it isn't, it won't.

And in that case, there will be only one judgment that the court of public opinion can return: guilty as hell.

Fintan O'Toole can be contacted at fotoole@irish-times.ie