Time for the main event. The DIRT hearings in the Dail Committee of Public Accounts have so far featured some entertaining tussling between senior civil servants and the committee members. But the real business will start as they begin to examine the Revenue Commissioners today.
There was a feeling, watching over the past couple of days, that the politicians on the committee wanted to put some blame on the civil servants, while the civil servants were happy to point out that they acted under ministerial direction.
So far we have learned that the Department of Finance, despite being aware - like everyone else - that tax evasion through bogus accounts was rampant, never did too much about it.
The senior civil servants present pleaded that they had concerns that any "crackdown" could lead to funds fleeing the State, although they were unable to produce any compelling evidence why this should be the case. Crucially, they also pleaded that they never got strong political direction to tackle the problem. And the reason why politicians did not want to do anything? Sean Cromien, the former Department of Finance secretary, in a classic "Yes Ministerism", pointed out to the committee that in the late 1980s many individuals were only "partially compliant" in their tax affairs. In other words, they were evading tax and a heavy hand from the Revenue would not prove politically popular.
But where was the Revenue in all this? No one is in any doubt that the appearance of the Revenue Commissioners, due to start today in the hearings, will see the committee attempt to get to the heart of the issue. In the first two days of the hearings, every time the questioning has got to why nothing was done about bogus non-resident accounts, the former Department of Finance secretaries have pointed out that tax collection is, after all, a matter for the Revenue Commissioners. Now the Revenue, led by its chairman, Dermot Quigley, will come into the spotlight and have some tricky ground to traverse.
It is not hard to see the likely line of questioning from the committee. Were the Revenue Commissioners aware of the extent of the problem? Why did they not exercise their powers to examine non-resident declaration forms - the forms people signed and lodged with the banks? Did they feel that successive governments did not want them to examine non-resident accounts? Were they aware of Central Bank concerns that doing so might lead to a flight of capital from the State?
The evidence so far has given little glimpses of the kind of issues which the Revenue will face. One key issue arises from a Department of Finance note of a 1987 meeting which says the Revenue had agreed to "consult" the Central Bank before using its powers to inspect non-resident account declaration forms. This was done, the evidence presented to the committee suggested, because the then minister for finance, Mr Ray MacSharry, was concerned about the possible economic impact of the move and wanted to know about it in advance.
In yesterday's evidence, an internal AIB document suggested the minister had assured the banks, in a 1987 meeting, that the inspection powers would not be used - "inspectability would not be an issue " was the quote - and that he would consider changing them.
No change in the powers occurred, but they were never used by the Revenue until after the current controversy surfaced last year. This is despite the Revenue uncovering substantial abuse in various cases, for example its 1991 visit to Miltown Malbay where it returned with over £2 million in tax from the holders of bogus non-resident accounts in the local Bank of Ireland. As Pat Rabbitte said at the meeting, it's a wonder the Revenue did not then consider moving on to Ennis, Raphoe and Swinford and looking at the declaration forms there.
So what will the Revenue say? Why did it not pursue the issue more diligently? We can get some pointers from the evidence of senior Revenue officials reproduced in the Comptroller and Auditor General's report. The first point the Revenue is likely to make is that it was aware of the official concern that the launching of an investigation could spark an outflow of funds. It will also argue that all the thrust of Government legislation was to limit the powers by which it could examine bank accounts and thus attract savings from abroad into the Irish system.
The Revenue will also no doubt repeat its assertion to the C&AG that "simply looking at foreign names and addresses" on a piece of paper through examining the declaration forms would not get it very far. It was not able to examine easily the underlying bank account - it required approval from the High Court and the Appeals Commissioner and suspicion of a named taxpayer to do so - and so had little powers to get behind the problem. And if it went to foreign tax authorities to get them to check names and addresses declared on non-resident forms, then it risked driving money from the Irish financial system, because behind the desire of successive governments to attract funds from abroad was the sure knowledge that much of that money was avoiding a foreign tax authority. Not only was the financial system a haven for domestic tax dodgers, it also did very well for many people who owed money to other jurisdictions. And by trying to crack down on the domestic evader, the risk was that overseas funds would also flee.
Finally, the Revenue will also point out that it did catch many tax-dodgers through other means, such as regular account audits or other work of the investigation branch.
Still, the committee will investigate why, despite the views of a number of senior investigating officials that it should so do, the Revenue never even selectively examined the non-resident declaration forms even to look for clues as to where tax evasion must be rampant. Some of the senior officials who will appear before the committee were in favour of such inspections. And just how the "policy" set by successive governments was conveyed to the Revenue will be one of the central points of interest.