Dáil Éireann debate -
Wednesday, 1 Dec 1993

Vol. 436 No. 5

Adjournment of Dáil under Standing Order 30: Motion.

Mr. J. Bruton

I move:

"That the Dáil do now adjourn".

The purpose of this motion is to reverse the decision taken by the Minister for Finance, without the authority of the Dáil, to change the terms of a tax incentive scheme, agreed after a very hotly contested debate here in this House by a majority vote, to make it much more generous than had been the original intention.

Perhaps I may explain what is involved. We are not talking here simply about a tax amnesty. Normally a tax amnesty is understood to mean that people who did not pay their taxes on time are allowed, at a later date, to pay them in full but without any interest or penalties being added; that is a tax amnesty. This is not a tax amnesty. This is what is rather insidiously described as a tax incentive scheme. Effectively it is an offer whereby people who should have paid income tax at, say 52 per cent, the top rate in 1990 or 1989, or capital gains tax at a rate of 40 per cent, but did not pay it at the time, broke the law and ignored their obligations, will be allowed to pay it now. Not only will they not be asked to pay any interest or penalties but they will be allowed to pay it at a rate of 15 per cent. In other words, more than twice as much as the tax they will actually be paying will be written off. They will have a large part of the tax struck out in addition to being exempted from penalties or any normal interest requirement.

This very strange, unprecedented offer to write off the tax of people who did not pay it on time was justified by the Minister for Finance at the time on the grounds that only if one did something like this would one be able to bring in some hot money from overseas. There were supposed to be vast amounts of money in secret accounts, in Swiss or Channel Island accounts, which people would never bring into this country and the only way one would get anything from these people would be to offer this special low rates of 15 per cent tax on the income they derived from this money, as against the 50 per cent rate of tax they might have paid had they left that money at home. It was to get this money from abroad that would not otherwise come in that this perversion of the tax system was to be allowed.

I did not agree with this, my party did not agree with it, and we opposed it quite strongly. We believe it to be unfair to those who pay their tax in full and on time to see others who did not pay their tax get away with paying only 15 per cent of their income in tax. Our arguments fell on deaf ears because the Fianna Fáil and Labour Parties were so desperate they felt they needed this hot money from abroad to plug a hole in their budget because they were over spending. They argued that they would only get the money into the country by doing it this way.

It now transpires that this 15 per cent tax rate, which involves a write-off of the equivalent of approximately 35 per cent of tax, is being offered in respect of money that had already been declared, that the Revenue Commissioners knew all about already but just had not got around to collecting. In other words, it is being offered in cases where there is absolutely no need for the incentive to bring the money in because the money was already here and had been identified by the Revenue Commissioners. The Minister was willing to allow those people pay at 15 per cent, whereas those who paid their tax on time paid up to 50 per cent. How could that possibly be fair? The cynics will say fairness does not exist in the tax code, it is a question of getting the money in. That is not so. Any law that is not based on some sort of concept of the general good, on some sort of concept of fairness, ultimately will pollute the entire legal system.

This decision of the Minister for Finance, apparently supported by the Department of Finance and the Revenue Commissioners, is polluting the Irish tax system in a very serious and undermining way. It is undermining the integrity of the system in a way that is very serious indeed. People will say maybe there will be another tax incentive scheme in 1998 and another in the year 2004. They will put the money aside for three or four years and eventually there will be another Fianna Fáil and Labour Government in office who will again be desperate for money and, in their search for solutions will pull down the 1993 Bertie Ahern model and offer another tax incentive scheme. They will then get away with paying much less than the proper rate of tax. That calculation will be made by lots of people who do not avail of this tax incentive scheme. Lots of people who will earn money next year — who obviously could not avail of this tax incentive scheme because they will not yet have earned the money — will be weighing up in their minds whether to pay. Many of them will decide to wait for another incentive. In particular I predict they will say that if, when an incentive or amnesty is announced, they put on enough pressure through their Fianna Fáil or Labour TD they will be able to have the scheme extended. They will not pay their tax on time but will wait for the announcement of another amnesty.

That sort of thing undermines the integrity of the tax system. It undermines the whole concept of standards in public life. It is quite ironic that, on the same day the Government approved an intrusive Ethics in Government Bill — under whose provisions everybody will have to declare all sorts of information about what they own — the same Government introduces a completely unethical change to a tax incentive scheme to extend it to people who broke the law and did not pay their taxes and offer a reward for their malfeasance, even though the Revenue Commissioners had found them out and there was no need to offer them an incentive. What concept of ethics in Government could that possibly represent?

I wish to make another point which is relevant to this debate. I believe that this proposal is unconstitutional in the same way that I believe the President will decide today to refer the Matrimonial Home Bill to the Supreme Court because of a doubt as to its constitutionality. The reason the President will be referring the Matrimonial Home Bill to the Supreme Court for examination of its constitutionality is that it discriminates in its treatment of two sets of families in exactly the same situation but for the accident of a date. A family who broke up before a particular date will not be able to avail of the provisions of the Bill while those who broke up after that date will be able to avail of them. It is on that discrimination, on the simple accident of a date, between people whose circumstances are otherwise exactly the same that I believe the President will decide, on the advice of the Council of State, this evening to refer that Bill to a test of its constitutionality. There is at least a 50-50 chance that the Bill will be struck down on that ground.

Exactly the same circumstances apply in the case of this amnesty. Let us take the case of two taxpayers both of whom have four children, both of whom earned £20,000 in 1988, both of whom had the same mortgage, are exactly the same in every respect, one paid their taxes on time, at the top rate of 52 per cent, while the other did not declare his tax on time but was subsequently found out by the Revenue of declared himself to the Revenue and agreed to pay the tax over a number of years and has not yet paid it in full. That second party who is exactly the same in every other material respect, in terms of the actual liability to tax in respect of the year in question, will get away with paying only 15 per cent tax whereas the former party will have paid up to 50 per cent tax. In other words, two people in precisely the same situation will be charged different rates of tax.

An Leas-Cheann Comhairle

I would remind the Deputy that two minutes remain of his time.

Mr. J. Bruton

I would remind the Minister also that that was the basis upon which the Supreme Court made the famous Murphy judgment. They found there was discrimination between two couples in exactly the same situation in terms of tax liability. One couple, who were married, were paying more tax than another who were cohabiting. The Supreme Court said that was unjust. The two people are the same, therefore they should pay the same rate of tax. The same argument that applied in the Murphy case, to declare that that form of tax discrimination between married couples and co-habitees was unconstitutional, can be used to declare this tax incentive unconstitutional on grounds of discrimination between people in equivalent and similar circumstances. One may ask who will challenge it. That, I respectfully submit, is not the point. The point is that regardless of whether anybody challenges it, every official of the Revenue Commissioners, every civil servant, every Minister in the Government is bound by the supreme law of the country which is the Constitution. It is not a question of whether you are caught by somebody suing you, you are bound to adhere to the principles of the Constitution. Anybody who lends support — here I am addressing myself to the officials — to an unconstitutional proceeding, as is now happening where people are lending support to this amnesty, is in breach of the Constitution and is culpable.

I condemn the Minister, the Government, the Labour Party, the Fianna Fáil Party, the officials in the Department of Finance and the officials in the Revenue Commissioners. I recall when we assumed office in 1981 people were asking why some officials had not resigned over what had happened previous to that. The question must be asked why no officials have resigned over this totally immoral and unconstitutional proceeding in introducing a tax incentive which involves radical and gross discrimination against compliant taxpayers in favour of those who did not comply with their obligations. It is wrong and the fact that the Government may be able to get away with it, because of its majority in this House, makes it no less wrong; it makes it all the more wrong. It is unfair and it is a disgrace and it will remain a blot on the Minister for Finance's career as long as he remains in politics.

Minister for Finance (Mr. B. Ahern)

The Waiver of Certain Tax, Interest and Penalties Act provides the basis for the tax amnesty, the primary objectives of which are to obtain the best possible yield from undisclosed tax liabilities for the period up to 5 April 1991, given that such liabilities are difficult to detect; to facilitate the use for the purpose of general economic activity and employment of those funds, related to tax evasion, which have up to now been held dormant, and to give those who failed to meet their tax obligations in the past one last chance to put their tax affairs in order, in advance of more stringent penalties for tax fraud, and the continuing strengthening of Revenue's compliance programmes.

It was essential to the achievement of these objectives to introduce an incentive for taxpayers to encourage them to bring their tax affairs up-to-date. However, this incentive is balanced by the introduction of stringent penalties for those who fail to put their tax affairs in order.

Mr. Yates

Will we be getting a copy of the Minister's script?

Mr. B. Ahern

Yes, in a few moments. I want to emphasise again that the amnesty is not an option for those who failed to pay their taxes in the past. It is an obligation to which they must adhere under pain of penalties. Moreover, the benefits of the amnesty are only available to those who regularise all of their pre-1991 tax affairs and also make a full disclosure, on time, in relation to their present tax liabilities. The legislation also provides for new penalties which include mandatory prison sentences and fines ranging from 25 per cent to 200 per cent of the tax evaded.

Taking the full view of both its carrot and stick elements, the tax amnesty is far from being an absolution for past wrongs. It is a pragmatic mechanism for bringing in those who have not met their obligations in the past and exposing them to their full liability for tax from this point on. This can only be to the benefit of the taxpayers.

Deputies will recall that, in the early stages before publication of the Waiver of Certain Tax, Interest and Penalties Bill, 1993, speculation regarding the incentive amnesty was that it would apply only to hot money i.e. undisclosed income which was held overseas. The Government had considered this point and concluded that it would be impossible to confine the incentive amnesty to funds held offshore, and that, even if this could have been done, it would be illogical to do so. The owners of those funds who had not paid tax were in the same position as the owners of such funds held in the State who had not paid tax.

The Government also considered that it would be inappropriate to exclude from the incentive amnesty arrears of tax, some of it very old and much of it based on estimates. This was tax which, notwithstanding the success of their arrears compliance programme initiative in 1989, Revenue was having considerable difficulty collecting.

I am not going to read all the letters received from all sides of the House putting ferocious pressure on me, as Minister for Finance, to extend this amnesty. The list is an interesting one. The people who have raised this issue are making the point that the arrears are on record with the Collector General for the years covered by the amnesty and are either estimated arrears — which they are in many cases — or they are equitable liabilities. In either case they are the poorest quality arrears on the Revenue records. The arrears which have been collected under the Revenue arrears compliance programme are those which it has proved possible to collect during the period. Revenue have collected much of the arrears during the period and some was paid in the 1988 amnesty. The people who had been out of business, out of pocket or were not in a position to avail of the 1988 amnesty because they could not afford it, based on estimates, are as much outside the system as some of the hot money we have heard much about in connection with this amnesty.

What is at issue is compliance. There will be the same opportunity for these arrears to come onside as the offshore funds. I find Deputy Bruton's argument totally illogical. It appears he considers it to be in order for a person in the Cayman Islands or with money in some offshore account to use the incentive amnesty, but for somebody who was so poor and in such difficult circumstances that he could not avail of the scheme in 1988 not to be able to avail of this scheme either. A Leas-Cheann Comhairle, if you can work that out, perhaps you could explain it to me.

The Government considered that it would be inappropriate to exclude from the incentive amnesty arrears of tax, some of it very old and much of it based on estimates. This was tax which, notwithstanding the success of the arrears compliance programme initiative in 1989, Revenue was having difficulty collecting. That is why we deal with it.

The explanatory memorandum published with the Waiver of Certain Tax, Interest and Penalties Bill, 1993, indicated that the incentive amnesty covered income tax, sur-tax, capital gains tax, income levy, health contributions and employment and training levies for the period up to and including 5 April 1991, which had not been paid by individuals. Accordingly, the incentive amnesty applied to unpaid tax on both disclosed and undisclosed income.

Members of the Opposition are suggesting that the Government have changed or extended the scope of the amnesty. I want to make it perfectly clear that the only change has been to extend the deadline for the making of confidential declarations to the chief special collector by three weeks up to midnight on 21 December 1993.

Mr. Cox

And to own up to all the implications publicly.

Mr. B. Ahern

The scope of the amnesty is set out fully in the Waiver of Certain Tax, Interest and Penalties Act, 1993, and there has been absolutely no change in these.

In case there is any doubt as to what is covered by the amnesty, I will quote from my opening speech on Second Stage at column 405 of the Official Report for 30 June 1993. I thank the Chair for giving me the opportunity, which I would not otherwise have, of answering this in the House. I said:

The overall amnesty scheme covers the generality of undischarged tax liabilities in respect of the period up to and including 5 April 1991. There are certain exceptions designed to protect the yield from ongoing Revenue enforcement activities to the fullest extent possible. Otherwise, it extends to all arrears of such taxes, comprising both liabilities in respect of previously undisclosed activities and other amounts unpaid.

There can be no doubt but that the reference here to the "overall amnesty scheme" included the 15 per cent incentive amnesty, because of the reference to exceptions which is only relevant to that tier of the amnesty. It was made clear by me, therefore, from the very beginning that otherwise the incentive amnesty applied to all arrears of the relevant taxes. This position was further clarified in my Second Stage speech when I again stated that the incentive amnesty related to "outstanding tax, levy and health contribution liabilities on income and capital gains". Could any statement be more unambiguous?

This position was elaborated on at the first and second pages of the amnesty leaflet issued by the Revenue Commissioners within a few days of the enactment of Amnesty Bill and which, I understand, was circulated to all Deputies and Senators. It was taken up by the various tax practitioners and accountants at that time. Whatever else needed clarification, it certainly was not that point.

Notwithstanding these clarifications, some confusion has since persisted on the matter. A second amnesty leaflet, published by the Revenue Commissioners in mid-October, dealt with many issues that were raised throughout the country and again made it quite clear that areas of tax were within the incentive amnesty. The point was also clarified in letters to taxpayers and at seminars hosted by the Revenue Commissioners throughout the country over the autumn months up to November. I find it inexplicable that some Deputies have pointed to a reference in my Second Stage speech to the exclusion of agreed taxes for the incentive amnesty. The actual legislative provision which I was summarising states that the only agreed sums which are excluded from the incentive amnesty are those

which, following inquiries made or action taken by an inspector pursuant to section 15 of the Finance Act, 1988, or any other investigation by an inspector, had been agreed before the designated date by an individual and an inspector as being the individual's tax liability.

In nine lines of my speech I set out in general terms the specific exclusions which are set out in over half a page of detailed legislation. Surely it is obvious that any speech by a Minister on legislation can give only a broad outline of the actual legislative provisions. It is unfortunate that certain Deputies may have misunderstood the extent of exclusion of agreed taxes from the amnesty. There can be no doubt, however, that the only agreed taxes which are excluded are those which had been agreed following an investigation or inquiry instigated by the Revenue Commissioners.

I would reject as absurd any notion that a Minister's speech should be a purely technical restatement of the detailed legislation. The Deputies will agree that the legislation is paramount and that in this instance the text of the legislation is absolutely clear. If there was any doubt about the intent and effect of this particular aspect of the legislation, there was ample opportunity to have this matter fully clarified in the course of the detailed debate on the Bill. I need hardly remind Opposition Deputies that this short 15 section Bill received the most comprehensive scrutiny by the Select Committee for three days, and in this House, thanks to the ingenuity of Deputy Cox who kept us talking at length on this subject during a discussion on another Bill — but, of course, he was totally in order.

Mr. Cox

I am glad the Minister acknowledges that the intervention was in order.

Mr. B. Ahern

In fact, the 1993 Finance Bill, which contained 143 sections, was also dealt with by the Select Committee in three days. The Select Committee's examination of the Amnesty Bill was something of a record as practically every amendment and every section of the Bill was discussed. If there was any doubt whatsoever about what this specific exclusion provision meant, which there was not——

Mr. Carey

The Minister still left a loophole.

Mr. B. Ahern

——there was ample time and opportunity for Deputies to raise the issue.

Mr. Yates

This is very weak whitewash.

Mr. B. Ahern

Would Deputy Yates like me to read some of the letters that his colleagues who have got it right have been writing to me?

Mr. Yates

We have a lot of reading to do. I have the Second Stage, Committee Stage and Report Stage debates.

Mr. Carey

The Minister should ask Deputy Ned O'Keeffe. He will tell him about the loopholes.

Mr. E. O'Keeffe

It is Deputy Carey's party which has the money.

Mr. B. Ahern

I will read out the letters, a Leas-Cheann Comhairle——

Mr. Yates

I have a lot of reading to do.

Mr. Cox

Is Deputy Ned O'Keeffe playing the béal bocht?

Mr. B. Ahern

The record confirms that there were no questions or doubt raised about this issue. I mentioned already that the Government has decided to extend the deadline for confidential declarations because of fierce pressure from all sides of the House and in particular from one party.

Mr. Cox

Is that the Labour Party?

Mr. B. Ahern

I want to emphasise that the revised deadline of midnight on Tuesday, 21 December 1993 represents absolutely the last chance to avail of the benefits of the incentive amnesty. Under no circumstances will this deadline be extended further. Moreover, the 14 January deadline for the payment of the settlements and for the general amnesty will not be affected. It is clear that over the past few weeks interest in the tax amnesty scheme has snowballed.

Mr. E. O'Keeffe

Do you hear that?

Mr. B. Ahern

Large numbers of people have been looking closely at what is on offer. Professional bodies have been hard put to deal with the avalanche of inquiries and have had to work up to midnight and on Saturdays and Sundays. This is why the Government has extended the declaration deadline. I hope that applicants will now seize this great opportunity to put their tax affairs in order and to play it fair with the compliant taxpayers.

One of the principal objectives of this amnesty is the freeing up of hot money, which has been hidden away at home or abroad in an effort to avoid its detection. The aim is to release these funds so that they can be used for productive purposes in the economy. The amnesty provides a generous incentive for the owners of such money to come clean, become complying taxpayers and put their hidden funds to better use for their own benefit and the benefit of the economy. They would be ill-advised to ignore it.

The tax amnesty covers, and has always covered, unpaid tax liabilities for years to and including 1990-91. In general, it extends to all arrears of taxes. It covers both liabilities in respect of previously undisclosed income and other amounts unpaid. In other words, it covers not only hot money and undisclosed income but also tax arrears. The basic condition of the amnesty scheme is that——

Mr. Carey

Poor Jacques Delors.

Mr. B. Ahern

——applicants must pay their liabilities under tax headings by 14 January 1994 and become compliant for the future. There has been no change whatsoever in the scope of amnesty; the only change has been in the deadline for declarations. I hope that those for whom this Bill is designed take this final warning.

Mr. Cox

This special debate tonight is called to discuss the extension of the tax amnesty, which, from the outset, was an outrageous, unprincipled attack on the integrity of the tax system, and a calculated insult to the intelligence of compliant taxpayers.

The extension of the amnesty refers to more than just the three-week postponement of the deadline. It is clear at this stage that the large-scale evaders, the so-called hot money merchants that the amnesty was meant to trap, have decided in large measure not to take the bait.

Mr. B. Ahern

Will the Deputy give them a call for us?

Mr. Cox

So, who has been clogging up the telephone lines in the special collector's office in recent days to such an extent that the Minister for Finance and the Government felt obliged to grant this extension?

If one was to read all the Dáil debate on the amnesty, one would come to the inescapable conclusion that those phones were busy due to thousands of callers with previously undeclared tax liabilities wanting to come clean, but that conclusion would be wrong.

The first chance the Dáil had to discuss this matter was on an amendment which my party proposed on the Report Stage of the Finance Bill in June last. Then the Minister for Finance told us, as reported in column 1666 of the Official Report of 2 June:

The Government has decided there will be an incentive scheme directed at those with previously undisclosed tax liabilities.

The Minister went on:

We must be careful that the scheme we devise does not make it attractive for compliant tax payers to become non-compliant.

So enthused was the Minister's partner in crime, Deputy Kemmy, Chairman of the Labour Party, about this tawdry legislation, that he came into the House and told us, as reported in column 1491 of the Official Report of 2 June to "face down the Opposition". He told us that there were three ways to look at this amnesty, that we could ignore the money abroad, we could condemn those who had money abroad as being unpatriotic or illegal or we could accept the fact that there was possibly £2 billion to £3 billion invested abroad which we could bring home under the amnesty and use in an intelligent way, among other things, to help eliminate the 1 per cent levy. It is clear that most of the money which is abroad will remain abroad. It is clear from the Minister, from the trade unions and from debates here that the 1 per cent levy is here to stay notwithstanding what Deputy Kemmy and his naive colleagues might have supposed some months ago.

The amnesty Bill was finally published at the end of June and the Minister made its purpose clear and explicit when he said in column 405 of the Official Report of 30 June last:

This present amnesty has been framed with a particular focus on the liabilities from the pre-1991 era which are not on the record——

Mr. Yates

Not on the record?

Mr. Carey

The Minister answered a specific question from me on this.

Mr. Cox

The Minister went on to question whether this was because of partial concealment or because they had entirely escaped the tax net. The Minister then went on to spell out specific exclusions from the 15 per cent incentive amnesty scheme. Among these was a reference to tax due on or before 25 May 1993 which, as reported in columns 409 and 410 of 30 June, "had been agreed with an inspector, but had yet to be paid". This point was repeated by the Minister during the debate.

To further emphasise the nature of the amnesty, the Minister told the Select Committee on Finance and General Affairs on Committee Stage on Thursday, 1 July as reported in column 655 of the Official Report:

The function of the special collector is to meet the non-compliant taxpayer, receive the money and issue the certificate.

He went on to reassure us, in column 657 of the Official Report of that date that:

We are trying to reach non-compliant taxpayers who have undisclosed liability. They come out of the dead wood, back from the Isle of Man, or wherever, change to their right names and declare the sums of money.

On Report Stage on 6 July, as reported in column 1213, volume 433, the Minister said:

If an individual was not previously known to the Revenue, that is the starting point. The knowledge represents progress and there is now a trail for audit purposes.

He added:

As the House will recall, the areas excluded are agreed with the inspector but not paid.

It is little wonder that the man who said that he was not a Matt Talbot socialist, Deputy Kemmy as Chairman of the Labour Party, led his colleagues who were pledged to put "trust in politics and justice in economics" into the division lobbies to vote in favour of this large golden carrot and the threat of a future stick to encourage hot money home.

Meanwhile the Revenue Commissioners issued the first of two explanatory notes to tax practitioners on the tax amnesty scheme, 1993. This note made explicit that the 15 per cent charter for cheats could, would and should be applied to outstanding liabilities whether previously disclosed or undisclosed for the period before 6 April 1991. The Revenue Commissioners set it out as it was, something which the Minister did not do with any great clarity. This turn of events ran totally counter to the reasonable Deputy here who had followed the detailed debate on the amnesty legislation.

A close reading of the law, as distinct from the essence of the Minister's presentation of its intentions, opened the door to taxpayers in the system prior to 6 April 1991 but who had not yet fully discharged their known, undisputed and agreed liabilities.

The tax profession was still unsure of where it stood. The Minister said tonight that some confusion persisted in the matter, so a second amnesty leaflet was published by the Revenue Commissioners. Much of the confusion was generated by the Minister who pretended that the amnesty did not really affect disclosed income already on the record. So that there would be no room for misinterpretation the second leaflet asked how would one treat a taxpayer who had made a part payment for the relevant period but had not fully discharged his or her liabilities. The answer to the question was an example of someone earning £40,000 and the Revenue said what the Minister has confirmed tonight, that if one has an undischarged liability that is already in the system, this amnesty obliges one to use it or else be in trouble in the future.

To illustrate the extent of the breathtaking unfairness of what is now the law here, and following Revenue's cue, I have compared four cases of people with a total taxable income of £40,000 for the tax year 1990 to 1991. The total tax, PRSI and levies paid by a PAYE person who is so trapped by the system, that he or she cannot but comply is £16,624. The total tax, PRSI and levies paid by the self employed person who was fully compliant and for whom the amnesty offers no relief is £17,200. Total tax, PRSI and levies paid by the self-employed person who part complied by paying £8,000 tax and is now availing of the amnesty for the balance outstanding is £10,335. The total tax, PRSI and levies paid by the tax dodger coming into the system for the first time is £6,865. From the point of view of equity and fairness between taxpayers this is a travesty. On an income of £40,000, the gap between the person paying the most and the person paying the least, that is the tax dodger, is £10,335. This is more than a quarter of the gross income of the people concerned.

The political point used to sell the amnesty was that the dodgers would come in and that at least would make us better off in the future. The reality is that most of the people who want to avail of it are already in the net and known to the Revenue authorities. When we see the statistics of income next year we already know that every £10,000 of apparent income will probably mask an actual tax write-off of £20,000 in collectable tax. A sum of £500 million was likely to be collected out of more than £2 billion according to the Comptroller and Auditor General's report for 1992. This amnesty will write down much of that and collect only part of it.

This amnesty is an absurd perversion of the tax system. It is a kick in the teeth to compliant taxpayers and its benefits will largely accrue to people already known to Revenue. The unearthing of that bonanza is why the phone lines were clogged up and why the amnesty has been extended. People finally copped on how grave this write-off is.

Proinsias De Rossa

I welcome the fact that the Ceann Comhairle allowed this debate tonight and hope it augurs well for the future when Deputies from this side of the House seek to have matters of current concern to the public dealt with here in a proper and extensive manner.

The decision of the Government to extend by three weeks the time limit for applicants for the tax amnesties, and to renege on commitments given to the Dáil by changing the terms of the 15 per cent incentive amnesty to include arrears declared but not collected, is a further stab in the back for compliant taxpayers and an indication of the extraordinary lengths to which the Fianna Fáil-Labour Government is prepared to go to accommodate tax criminals. While the Minister has extended the deadline for applications under the amnesty to 21 December, 25 December might have been a more appropriate date, given the Government's Santa Claus approach to some of the wealthiest tax cheats in the country.

The principle of the amnesty was morally wrong in the first place and the decision to alter the terms and extend the deadline adds insult to injury. What is involved here is not simply a question of turning a blind eye to a few people who failed to fill in a few forms or who took a short cut through some bureaucratic red tape. This is a case of a Government deliberately setting out to legally pardon and financially reward some of the biggest financial criminals in the country who over a long period of time thumbed their noses at the tax authorities and compliant taxpayers and deliberately ignored exchange control regulations.

It is now almost five months since the legislation to allow for the amnesties was passed by the Oireachtas. It was widely publicised at the time and later extensively advertised and promoted by the Revenue Commissioners.

A special office has been open in Harcourt Street for more than four months to protect the confidentiality of the tax cheats. Given those factors there is simply no justification for a further generous extension of the deadline for those cheats who have now only made up their minds to apply.

The Minister acknowledged that there has been heavy lobbying by accountants and tax consultants to have the deadline extended, but they are not disinterested parties. Those people are making big money from the two amnesties and stand to make even more if the deadline is extended. The more tax evaders they recruit during the next three weeks, the fatter their basket of fees will be by 21 December.

It is extraordinary that — as is the case with many farmers — tax evaders seem quite willing to pay huge amounts of money to accountants and tax consultants, but are unwilling to pay anything to the Exchequer. The greed of tax consultants and accountants is not sufficient grounds for extending the deadline for an amnesty which was set out by the Oireachtas.

Indeed, I dispute the right of the Government to effectively change the terms of the Waiver of Certain Tax, Interest and Penalties Act, which have been set out by the Oireachtas. The legislation passed by the Oireachtas specifically set 30 November as the deadline for the receipt of applications for the amnesties. The very first section of the Act defines the specified period for applications under the two amnesties as "the period beginning with the passing of this Act and ending on the 30th Day of November, 1993". The Act did not give the Minister, the Government or anyone else — other than the Oireachtas — any power to change that date.

When I raised the matter on the Order of Business yesterday the Taoiseach said there was no need to introduce any legislation now to validate the extension and indicated that this would be done in future legislation — presumably the 1994 Finance Bill, which will not be enacted until around the end of May.

There is a duty on the part of the Minister to warn tax criminals who may be considering availing of the extension that they now enjoy no legislative guarantees with regard to confidentiality or immunity from prosecution which were available to those who applied prior to 30 November. It is clear from the Act that these lavish guarantees were available only to those who applied within the specified period. It is clear also that the "permanently binding declaration of confidentiality" which the special collectors were obliged to take will not apply to declarations made from today. Any information which comes to the attention of an officer of the Revenue Commissioners from today will enjoy no special protection and the officer will be entitled to bring such information to the attention of other sections of the Revenue Commissioners or the Garda. Any guarantees that the Minister may purport to give has no legislative backing.

Another major development is the change in the terms of the tax amnesty and the reneging on commitments given to this House by the Minister for Finance. During the Second Stage debate the Minister specifically said that "tax which, on 25 May, has been agreed with the inspector but had not yet been paid" would be excluded from the terms of the amnesty. We should compare this with the reality of how it has operated, as described by a leading accountant in today's Irish Independent, who stated that many of those availing of the amnesty on this occasion were already being pursued by the collector general.

Pat Newham, a partner with accountants Grant Thompson, stated that it is obviously better to pay 15 per cent tax on income up to April 1991 than on the full tax already declared, which may be due to the Collector General and that many of the applicants had tax arrears already and took advantage of the amnesty to clear up long outstanding amounts at a low rate. I would like the Minister to comment on the claims in today's Irish Independent that accountants used computer printouts from the Revenue Commissioners to locate clients who were slow in paying taxes for prior years.

There is little doubt that the terms of the amnesty were extended because it was not meeting the lavish targets predicted by the Government when it was first announced last May. According to the Minister the really big evaders, the mortal sinners, are not coming forward under the amnesty. Is that any surprise, given the huge amounts of money that can be made from tax evasion and the indulgent attitude of successive Governments to this form of crime, represented yet again by this extension?

This is the fifth tax amnesty that we have had since 1988. Those who availed of the 1988 amnesty and who subsequently reneged on their tax obligations are again covered by this amnesty, which is again being extended beyond its original terms and deadline. What message does that convey to the serious tax evader? The message plainly is that there is no need to worry because if they wait long enough the Government will look after them and there will almost certainly be yet another amnesty.

Threats of jail are not taken seriously.

As far back as the Finance Act, 1983, stiff penalties, including jail terms, were provided for a wide range of tax offences. Yet when have we ever heard of tax offenders going to jail? There are no Lester Piggott's in Irish jails.

It must be emphasised once again that tax evasion is not a victimless crime. Every pound of tax evaded by the rich puts an extra pound on to the bill of the PAYE sector. There are many other victims of these criminals — children in overcrowded classrooms, the handicapped denied facilities, the sick enduring long waiting lists for treatment and the homeless with no hope of accommodation. Those are areas where money robbed from the Exchequer by tax evasion could and should usefully have been spent.

The decision to extend the amnesty to facilitate financial spivs marks a further humiliation for the Labour Party. Those who represent Labour at the Cabinet table appear to have thrown in the towel and are prepared to meekly go along with whatever Fianna Fáil decides. Is there not one person among the timid 33 prepared to take a stand on this issue and oppose with their Vote tonight what many privately admit to be totally unjustified?

The Labour Party Deputies will have to make up their minds about where they stand. Will they stand with the tax cheats and their supporters at the Cabinet table or with the PAYE workers, the sick and the unemployed, in support of a fair and just system where everybody pays a fair share? That is what tonight's vote is about. That is what the Labour Party must make up its mind on.

Mr. Kemmy

I thought Deputies Cox and De Rossa would have a go at me this evening and for that reason I came into the House. I will be a long time in this House before allowing either of those Deputies to lecture me, because on matters from Northern Ireland to taxation my record will stand compared with that of Deputies Cox and De Rossa. I would be a very poor socialist if I took my leadership principles from Deputy De Rossa who would be much better off controlling his own party — all four of them — putting his house in order and developing a policy which would appeal to the Irish people rather than lecturing me on this matter.

I am here as the Chairman of the Labour Party while the Deputy is here as the leader of a party of four. Like Deputy Cox, Deputy De Rossa spoke with great moral indignation and adopted a self-righteous attitude. Both are men of the world. It is possible, though unlikely that I am naive; I have travelled many a long road also and, I therefore, am not prepared to listen to any homilies from the Deputy. We live in an imperfect society. There is a saying in Limerick, of which Deputy Cox must be well aware, "we robbed and plundered but we kept the faith". It is true that if everybody paid their taxes, this amnesty would be unnecessary. It is an indictment and a reflection on our society that we have to offer this amnesty at this stage.

Mr. Cox

And on the Government.

Mr. Kemmy

Yes, but the Deputy should not forget that he is a member of the European Parliament and that the Governments of two of the weathiest countries in the European Union, Germany and France, have offered different types of amnesty at different times because hot money was transferred to Switzerland and other countries. That is the world we live in. I would love to live in the idealistic world that the Deputy spoke about tonight — it would be Eldorado or a dreamworld for me.

Mr. Power

Tír na nÓg.

Mr. Kemmy

I live in the real world and we need money to run society. One can talk about these matters until the cows come home but the reality is that we have to face the world as it is; we do not inhabit a dreamworld.

Mr. Cox

What about the 1 per cent levy?

Mr. Kemmy

I will deal with that matter in a few moments. The reality is that an estimated £2 billion has been spirited out of the country illegally. The people who spirited this money away are not from Mars — they are the pillars of our society, supporters of the Deputy's party, even members of his party.

Mr. Cox

I do not carry the can for them.

Mr. Kemmy

They are the people we are talking about and, as I said, they are the pillars of our society.

Mr. Cox

I did not try to facilitate them.

Mr. Kemmy

They are the people who spirited this money out of the country. It is unlikely that they include the super rich as they have their own ways of evading and avoiding tax.

Mr. Cox

It is going to remain outside the country.

Mr. Kemmy

It is estimated that there are 15 million bank accounts in this country which has a population of 3.5 million. I am aware that some of these accounts are innocuous in that they are in the names of schoolchildren and may contain nothing but it is also possible that many people have a number of bank accounts, not always for honourable purposes. In this regard, we have two choices. Deputy Cox quoted what I said in the House on a previous occasion accurately and I am grateful to him for that. We can either ignore reality and close our eyes to tax evasion or else tackle it. I would be more stern and draconian than the Minister in dealing with it but we are partners in a Coalition Government and have to reach a compromise. My party supports that compromise because we are in the minority in Government and cannot insist on getting our own way on every issue. There has to be give and take and a reasonable compromise.

Mr. Yates

It is the fault of the Fianna Fáil Party.

Mr. Cox

This hot money will remain outside the country.

Mr. Kemmy

It is possible that it will remain outside the country but the Deputy made a distinction and implied that one tax evader was better than another, that the person who had transferred money out of the country was holier than the person who had evaded taxes in Ireland. That is a bogus and spurious distinction and I do not accept this.

Mr. Cox

One taxpayer gets more tax breaks in the name of equity.

Mr. Kemmy

Tax evaders come in all shapes and forms. Some transfer money outside the country while others keep it within the country. Something had to be done about the matter. Talk is useless. We must have a policy to attract some of this money back and entice people to enter the tax net. It would be of no advantage to PAYE taxpayers to ignore the issue.

I have listened carefully to this debate and no one from the Progressive Democrats, Fine Gael or the Democratic Left has put forward an alternative.

Mr. Cox

No amnesty.

Mr. Kemmy

The Deputy is entitled to criticise the amnesty but so far as we are concerned——

Mr. Cox

That is the alternative.

An Leas-Cheann Comhairle

Deputy Kemmy to continue, without interruption.

Mr. Kemmy

The Leas-Cheann Comhairle need not worry. I am well able to hold my own with Deputy Cox. Perhaps I will confront him in another forum soon when we will see how far he will get.

These people have been indicted as tax cheats, hot money merchants and so on but, as I mentioned in a previous contribution, they are to be found among many occupations. Indeed, clergymen are often indicted for evading taxes. I am amazed when I see the details of wills that have been published. Often people whom one would have thought had nothing, leave hundreds of thousands of pounds on which they could not have paid their fair share of taxes. I am also amazed when I see the list of occupations of those who reach tax settlements with the Revenue Commissioners. Anyone who has looked at that list would have to accept that tax evasion is endemic in society. I wonder how these large sums of money are amassed. The amnesty has been offered in an attempt to face reality and to discover the money that has been hidden.

I have not been impressed by the contributions made by members of the Opposition tonight, most of which have been made tongue in cheek.

Mr. Cox

Justice and economics.

Mr. Kemmy

If anybody believes that the Progressive Democrats or Fine Gael would be more stern or draconian in dealing with tax evaders——

Mr. Cox

We did not put our name to any amnesty.

Mr. Kemmy

——I would not think much of their intelligence. Their arguments are not of much help to PAYE taxpayers. I hope this money is attracted in large amounts——

Mr. Cox

It is not coming.

Mr. Kemmy

——to the coffers of the Department of Finance and I do not mind if it is paid from outside or inside the country. I am concerned about the phasing out of the 1 per cent levy. I am also concerned that more houses are built——

Mr. Cox

Will the money be used to do this?

An Leas-Cheann Comhairle

The Deputy has only a couple of minutes left and he should be allowed to proceed without interruption.

Mr. Kemmy

It is a measure of the weakness of their case that they have to barrack and heckle me but it is like water off a duck's back.

Mr. Cox

That is true.

Mr. Kemmy

I have been well able to handle Deputy Cox in the past and I will do so again tonight. In heckling me he is highlighting the weakness of his own case. If he had a strong case to make, he would listen in silence to my contribution.

Mr. Cox

We have heard it all before.

Mr. Kemmy

Instead he has made a fool of himself in front of the public gallery and the media. It is also a reflection on him that he has not the courtesy and good manners to listen to me and give me the right to speak in this House.

Mr. Cox

Justice and economics.

Mr. Kemmy

Fortunately, I never worry when he heckles me. I enjoy it because it shows that he is an undergraduate at heart and has not got the necessary maturity, poise and sophistication to be the leader of his party.

This money will be used for a good purpose — to phase out the 1 per cent levy and build more houses. It is most important that the housing programme which commenced this year is continued next year and the year after to bring the large waiting lists to an end.

Deputy Bruton criticised officials in the Revenue Commissioners. I do not accept this as I deal with them on a regular basis in Limerick and they are people of high intelligence, ability and integrity. I am confident when the amnesty has expired they will go after tax evaders with renewed vigour. I am also confident that the penalties enshrined in the legislation will be enforced and, if necessary, people will be sent to jail. This has happened in other countries. I am not vicious by nature and would not go after anybody in a vindictive way but it is important that the amnesty should not be seen as an easy means of avoiding taxation; rather, it marks a watershed. In the future tax evaders will be dealt with sternly by the Government and, if necessary, they will be put in jail.

Mr. R. Bruton

To take up where Deputy Kemmy left off, this week Dublin Corporation passed its estimate. It decided that it would pursue vigorously those who had failed to pay their rents. In some cases, the people concerned are only paying £2-£3 a week. We decided to take draconian measures to make sure that these liabilities would be met. It is ironic that Deputy Kemmy, chairman of the Labour Party, should be party to such a draconian measures which has to be taken to ensure the credibilty of our rent system but is happy to come into the House and tell us it is all right to wipe out the arrears of the high rollers who have been unwilling to pay their way for years.

This Government has a habit of talking to us about equity, ethics and social exclusion but these words have a hollow ring. This is a moral issue. The first issue I ever raised when I came into the Dáil in 1982 was that of tax evasion. I still have the statement I read on that occasion, when it was quite clear that our Revenue Commissioners were not enforcing the law in respect of the tax code. Over the years we have tightened up the procedures to ensure that people will pay their tax on time and that interest payable on penalties will be collected. Broadly speaking, we have succeeded in creating an honest and complaint business and trading sector. What we are doing in this Bill, and doing again tonight by extending the time limit, is thumbing our noses at those people who have been willing to comply and telling them that their efforts to pay up on time and pay what was due was folly, that when Ministers found they were running out of money to finance their over ambitious schemes they would wipe out the obligations and tap into what they called "difficult to collect" money. That is not an acceptable way to run our tax code.

Anyone who examined our tax code with a view to establishing the inequities in it would not look first to the design of the code. It is true there are inequities in our code. We refuse to recognise children. We insist on taking levies from the first £1 of people who are in the PAYE workforce. But the real inequity, as we all know, is the difference in the opportunities there are for people in the taxpaying community to conceal their liability and to evade. These are not the PAYE sector that Deputy Kemmy talks about. What we have done tonight is to say that the insider traders who have been able to conceal are to be rewarded.

The sums at stake are not chickenfeed. We are not launching a new crusade just to tidy up things; we have had several crusades in the eighties. We are not discarding small sums. In the report of the Comptroller and Auditor General, which were received recently, it is stated that amounts outstanding in respect of which this amnesty applies comes to £1,500 million, and many of those are disclosed sums that are not disputed, are under demand and being enforced. These are sums that the Revenue Commissioners are actually in the course of pursuing. To say that we will forget about all that, that the people who have paid on time and have carried the can will be written off, and that those people who were willing to drag their feet and go to the last ditch to evade their responsibilities are to be let go scot-free, is no way to establish a tax code or any code that we hope will bring us into a competitive Europe.

Many Ministers complain about the lack of enterprise here. The Minister himself is on record as saying that it is a shame that the enterprise and energy of many of our people is distracted into elaborate schemes and tax wheezes, trying to generate schemes that can avail of grants. We have heard many lectures and seen Ministers nodding sagely about what a shame it is that people waste their time searaching for clauses in the tax code that will allow them to evade responsibility. Now the whole integrity of the tax code is being thrown out so that we can get a few hundred million pounds into the Exchequer, which will be spent, as all the rest of the money is spent, and forgotten about quickly.

We have a Government that in the last few years has allowed spending to run rampant, ahead of the ability of the Government and the economy to pay interest. Then, when they are running out of steam, they squeeze the cloth dry in this way by allowing people who should have been paying on time to get away with it. There is nothing more corrosive to enterprise in this country than the belief that is spreading that if one is cute enough one will get away with it. That is not the signal the Minister for Finance should give to young, enthusiastic, dedicated people who can give their talents to create enterprise in Ireland.

Let us not forget that the Minister for Finance has a sacred trust. It is he who is set up as the defender of the legitimacy of the money that is put into the coffers. It is he above all who is there to make sure there is fair play and that money is used wisely. It is ironic that it is he who has decided to adopt this approach to tax arrears. It was amusing to hear him say that various representations are made to him, as much as to say there are Deputies out there who are phoney. Of course, he will get representations. We have developed a political culture where anything that is passed along will be passed on a little further. The Minister is elected and given a sacred trust to stand between the taxpayer and all sorts of representations and backsliding, but he is not willing to take his responsibilities seriously.

The great saving of the tax code was to be self-assessment; it was to be the watertight answer. We would have random and detailed audits and anyone who was found not complying with their responsibilities would have the book thrown at them and no mercy would be shown. That was until 1988, when they were shown mercy and told that they could get away with it while the rest of us had to pay our way. Again, the Minister is doing the same thing.

Mr. Cox

Worse.

Mr. R. Bruton

The Minister talked about the importance of equity between the cheater who lives in Ireland and the cheater who lives in the Cayman Islands. What sort of equity is it that the Minister is trying to introduce on the floor of this House? There is no future in that sort of talk. What we want is a tax code which the Minister, despite his many years now in occupation of that office, has been unwilling to provide. We want to see tax reform, but on the basis of fairness, where people pay what they are liable for and honour the integrity of the tax code.

In recent months the Minister has destroyed everything that was being built up. A strong tax code, from which there would be no shirkers, has been thrown out the window; and people know that all this talk about this being the last chance is phoney. The Government has bored the House with its talk of how it almost invented the notion of morality, ethics and equity in politics. There are many in this House who for years before the 33 came in here and lectured about fairness sought to establish fairness in our tax code. What we are talking about here tonight is the integrity and morality of the way we do business as public servants, which all of us here are. The Labour Party is not honouring the trust placed in it by the electorate when they got such a large vote based on the notion of equity, of change, of ethics. On the Labour Party above all must fall the responsibility for allowing this to reach the floor of the House.

Deputy M. Ahern rose.

Mr. E. O'Keeffe

You were two terms in Government.

Mr. Carey

You will get your chance. Do not interrupt Deputy Ahern.

Mr. M. Ahern

I would like to share my time with Deputy Batt O'Keeffe.

An Leas-Cheann Comhairle

I am sure that is satisfactory and agreed.

Mr. M. Ahern

As a member of the Committee of Public Accounts for eight years I each year listened to the Comptroller and Auditor General outlining the estimated outstanding taxes under all heads. The estimated outstanding taxes for the self-employed were always accorded banner headlines although the chairman of the Revenue Commissioners was always at pains to explain the difference between estimates and the likely tax take. Deputy Cox quoted a figure of £531 million outstanding likely to be collected; £165 million of that related to income tax. Corporation tax, which does not come under the amnesty, took up a large amount, plus VAT, PAYE and PRSI, which were agreed figures. The Deputy should get his figures correct.

Mr. Cox

The Deputy should read the report of the Comptroller and Auditor General. My figures are correct.

Mr. M. Ahern

This amnesty will afford an opportunity to establish realistic figures for the future and put a stop to headline-grabbing figures often out of line with the factual situation. In my years in practice as an accountant and as a TD I have encountered many people who were worried sick about what would happen to them if the Revenue Commissioners discovered that they had some undisclosed sums, no matter how small. Some were close to distraction in that regard but were not willing to legitimise their funds because of the penalties which would be imposed and the tax that would be deducted if those funds were disclosed. The amnesty allows those people to legitimise their funds and, by so doing, it will benefit those people, their local economies and the Exchequer.

The amnesty when first mooted was viewed with scepticism by many acountants, tax advisers, commentators and-politicians. However, during the past few weeks a change of attitude has occurred and the number of people who wish to participate in the amnesty has increased greatly. They include those who wish to clear up the outstanding tax Bills or submit undeclared income. The income collected from those sources through the amnesty will have a beneficial effect on the economy. Additional capital will be freed to be used in the economy at local and national levels. Investments will be boosted as people will no longer be afraid to use this money for repairs, extensions and development of their businesses. People who were afraid to use that money in the past will no longer be afraid to spend it. The tax base will be widened as a number of people who operated in the black economy, on a full-time basis and sometimes on a part-time basis, will now come within it. The tax base will be spread over a greater number of people. There will be an increased tax take for the future. The tax take for 1990-91 cannot be accurately estimated yet, but it has been stated that it will be in the region of £250 million to £300 million. The Exchequer will stand to gain a further 40 per cent to 50 per cent in tax on the money declared for the subsequent tax years 1991-92 and 1992-93 and for future years.

Since the MacSharry amnesty my colleagues and I have noticed a sea change in attitude in relation to tax compliance and tax payment and this is borne out by the Revenue Commissioners. People are becoming more aware of their duty to keep their affairs up to date and they pay their tax on time. They are helped by greater vigilance, quicker enforcement of the law and the imposition of penalties and interest charges.

Mr. Cox

Why do we need an amnesty?

Mr. M. Ahern

In the past few years the new approach by tax inspectors of moving around the country rather than looking at PCs has and will continue to ensure that the tax system will be more effective, that compliance will improve and that there will be greater equality between all taxpayers thus ensuring a reduction in the tax burden of all individuals. PAYE workers may not realise that the amnesty is also available to them. Those who have undeclared investment income, whether sourced from inheritance or gifts or from some sideline, may and should avail of this opportunity to legitimise their income.

I welcome the decision to extend the amnesty to 21 December as it will bring more money into the Exchequer and enable the Government to do more for the economy. While, in principle, I do not favour amnesties the Government decision was a practical one which in the long run, will benefit the economy.

Mr. Cox

I salute the Deputy's principles.

Mr. M. Ahern

The Progressive Democrats and Fine Gael are the parties supported by the richer sectors of our society and their supporters will benefit most from the amnesty.

Mr. Cox

We never wanted the amnesty. The Deputy should not throw that at us.

Mr. M. Ahern

There are Deputies opposite crying crocodile tears but their supporters are rubbing their hands and smiling benignly at their bank accounts.

Mr. E. O'Keeffe

I welcome the opportunity to speak on this important extension of the date of the amnesty. I, like my colleagues in Labour and Fianna Fáil, support the extension. It is worthwhile. I was appalled by Deputy Bruton's attack on the Civil Service and the Revenue. The people will judge what he said. His comment was uncalled for. I have been busy in my constituency and I am well aware of the number of people who want the closing date extended. They include people who own small and large sized businesses who want to put their houses in order. A few months ago Deputy Cox was the Progressive Democrats spokesperson on Finance. While I admire him I cannot let him get away with everything. He spoke earlier about tax cheats, a remark that was uncalled for. The wealthy and those who own property are represented by Deputies opposite. We do not represent that section of society. Deputies opposite cater for those who live in the Dublin 4 area. Deputy Cox's party can identify most with that sector of society. His party was founded to represent that niche.

Mr. Yates

What is the Deputy's quota?

Mr. E. O'Keeffe

I do not have a quota. The attitude of the Deputies opposite is nonsensical. Their opposition to the tax amnesty smacks of hypocrisy and humbug. That is particularly true of the Progressive Democrats and Fine Gael who both supported the previous amnesty but for reasons of unadulterated political opportunism have decided to oppose this amnesty. We should not be so surprised as that is typical of Progressive Democrats behaviour. Their accusations are emotive and do not hold up. The electorate will judge them shortly when its members will be on platforms around the country.

This amnesty is about putting down markers for future tax evasion policy. Initially it is important to clear the decks. This amnesty is a practical response and should be welcomed as such. The Minister has the courage of his convictions and is putting the house in order. From now on we will have a level playing pitch and our people will be looked after legally on such a pitch.

I would remind the House that in every system there is an obligation to clear tax arrears and this is an opportunity to do so. The amnesty is a good opportunity to do this. Bad-mounthing the amnesty will not do our taxpayers, who do not avail of it, any good. They are being frightened by the Opposition and by the two major political parties who represent the wealthy and those who own property.

Mr. Cox

We welcome the concession.

Mr. E. O'Keeffe

Their opposition serves to undermine this obligation and frightens people who may be caught in the system. People who support the parties opposite are concerned. It makes good business sense to comply with the amnesty as more and more people are dependent on tax claim certificates to do business. Every day questions are tabled by Fine Gael and the Progressive Democrats as to when a tax rebate may be made to a person whose details are supplied. Do Opposition Deputies recognise this aspect of commercial life? Businesses must continue and people must live. This is the reality of living in Ireland and being part of Europe in 1993.

Under the amnesty the Minister answered a call for a practical response to the current situation. It behoves everyone, including Deputies opposite to co-operate with him. I urge those Deputies to rise from their slumbers and wake up to the needs of those involved in commercial life. They should cease their endless carping. There is a substantial amount of money out there. I congratulate the Government on introducing the amnesty. I am not afraid, like Deputies opposite.

The health boards' liabilities are being cleared and this could not be done without putting in place a mechanism to collect funds. I understand the figure of approximately £80 million will be made available to our health boards which will result in us getting a health service that will rival that of any in the western world.

Deputy Kemmy referred to housing. I attend local authority meetings at which Deputies opposite constantly scream about the housing waiting list. Now they want to stop us collecting funds to provide housing for those on those waiting lists. I admit we have a housing problem. If Deputies opposite want houses built they must find the money to do so. We now have an opportunity to provide housing.

We have to send people to Belfast for hip operations because we cannot perform those operations in our hospitals. We cannot afford to expand the existing facilities to provide that much needed service. Some of the money collected under the amnesty will be used for that purpose. We are a caring Government. Fianna Fáil has always been a caring party and it has always done its best for the community.

Mr. Cox

The halo effect.

Mr. E. O'Keeffe

This is part of our policy and the amnesty will allow us to care for the community. Deputies opposite tend to adopt the high moral ground but we should adopt a practical attitude. We should be productive and co-operate with the Minister.

Mr. Carey

That is cheap pragmatism about the £300 million the Deputy's party is giving away.

Mr. E. O'Keeffe

The Deputies opposite kept Members in the House day and night going through every section of the Bill with a fine tooth comb, but what did they achieve? They were going to leave £300 million after them, a sum of money which this economy needs. That was embarrassing for them.

Mr. Yates

First I thank you, Sir, for allowing this motion under Standing Order 30. It is not a common event, but you and your officials understood the gravity of what was involved. Having listened to the speech of the Minister for Finance tonight, I know how Jacques Delors felt in relation to the EC Structural Funds. Having sat through six days of debate on this Act and going through the debate line by line in the last 24 hours, I cannot understand how the Minister could make such a speech here tonight. It was a monstrous whitewash and a barefaced attempt to try to gloss over Second Stage, Committee Stage and Report Stage debates on this matter. I will quote for the record of the House exactly what was said on each Stage. As regards the inclusion of tax arrears in the 15 per cent incentive amnesty, the Minister seriously misled the Dáil and the Select Committee on Finance and General Affairs from 30 June to 7 July.

In the Minister's Second Stage speech of 30 June he said that "this present amnesty has been framed with a particular focus on the liabilities from the pre-1991 era which are not on the record". He referred to the tax liability on such undisclosed income and said that the scheme was aimed at bringing these people within the tax net. However, tax arrears represent money that has been already disclosed and the people involved are in the tax net. Later in the Minister's speech he outlined the exclusions from the scope of the 15 per cent amnesty, one of which is "tax which, on that date, had been agreed with an inspector but had yet to be paid". What reasonable conclusion could anyone draw but that that tax was in the Collector General's office. The Minister said specifically that that money would not be included in the amnesty.

There were so many references to this matter in the select committee that it is embarrassing for the Minister, and I regret his absence. On the incentive amnesty the Minister said: "We are talking about a person who is non-compliant and who may be outside the tax net, perhaps somebody who is working on 50 per cent or 60 per cent of their figures and they fill in a form for 1992-93". He went on to say that the incentive amnesty has two principal objectives. The first is to take the maximum amount of tax paid at the 15 per cent rate in respect of periods up to 1991, the bulk of which in all probability would not otherwise have been declared to the Exchequer. This is not arrears but money that would not otherwise be declared. The second objective was to create a substantial body of new compliant taxpayers in the year 1992-93. There was no mention of a third category of people who were in arrears. This is an analysis of what took place in the committee.

The Minister went on to say that the function of the special Collector General is to meet the non-compliant taxpayer, receive the money and issue the certificate. He said that these people would not check anyone other than the non-compliant taxpayer. He went on to say that we are trying to reach non-compliant taxpayers who have undisclosed liability. The Minister made abundantly clear time and again that the point of this amnesty is not to forego tax which he received in any event. In answer to my question to the Minister as to what section 2 of the Bill covers, he said: "It is undisclosed liabilities up to April 1991".

On Report Stage the Minister gave similar assurances to the House. Not once did he say in this House or in the committee that the amnesty would relate to tax arrears. The Minister said on Report Stage:

There are thousands of individuals outside the system who are not known to Revenue, who are holding back at least part of their taxes on an annual basis and have done so for several years. Many of these people ignored the 1988 amnesty and will take the opportunity of availing of this amnesty.

The Minister referred to individuals with undisclosed liabilities, not only of income tax but of all taxes. He said the amnesty would help to maximise tax revenue which would never be collected otherwise. Non-compliant individuals with liabilities before April 1991 would be required to present themselves, or their adviser, to the special collector's office and in the case of income tax and capital gains tax 15 per cent interest would be paid. The Minister made that clear time and time again.

At no stage did the Minister say that people with tax arrears before April 1991 could go to the special collector and recalculate their tax liability on the basis of the 15 per cent rate, and I defy anyone on that side of the House to produce a quote to that effect. I am advised by people in the media that in the Minister's private briefings, when he was asked explicitly about the questions of arrears, he clearly repeated that the 15 per cent rate did not apply in those cases. This not only undermines the integrity of the tax system but makes a mockery of the credibility of the Minister.

Section 2 of the Act provides that people who avail of this amnesty will receive a special certificate which, when presented, exempts these people from a rigorous analysis by the Revenue Commissioners. Therefore, people in the system who owe £20,000 in tax will avail of the 15 per cent rate and will have the privilege of a certificate which will give them immunity from analysis by the Revenue Commissioners. That is absolutely farcical.

I regret the Minister had to leave the House, but I would like to know why this change was made. There is no doubt that this matter was misrepresented to the committee and to this House. Either tax experts realised the ambiguity of section 2 of the Act and threatened to fully avail of it, or alternatively — and more likely — the well was dry, there were no inquiries and it was a dead duck. The Minister, having last year received £174 million from the sale of shares in Greencore and Irish Life, realised there would be a shortfall in next January's budget. Therefore the reason 14 January was stated as the date for payment of this tax was so that it would be included in the 1994 balance sheet to make it look respectable.

We want to know why this change was made and when it was made. The reality is that the scope of the amnesty was greatly widened about six or seven weeks ago to include all arrears. The Minister must quantify the loss to the Exchequer from this change. Most of the money that is being included would have been collected anyway, but now it is being discounted. I accept that the figure of £3 billion given by the Comptroller and Auditor General is not correct. The figure is probably £400 million and, taking into account VAT and taxes paid at 15 per cent, the amount paid on a discounted basis will be probably in the order of £200 million to £250 million. We need to know exactly how much is being written off in this case.

The people in charge of this amnesty, who are not available to take telephone calls, realise that the amnesty is out of control. It has gone beyond that which was originally intended. I am bitterly disappointed that the Minister did not admit tonight that he was in no doubt, in his presentation to this House and to the committee, that arrears were included. The Minister seriously misled the committee and the House and that gravely reflects on his credibility.

Question put.

The Dáil divided: Tá, 42; Níl, 68.

Tá

• Ahearn, Theresa.
• Boylan, Andrew.
• Bradford, Paul.
• Browne, John (Carlow-Kilkenny).
• Bruton, John.
• Bruton, Richard.
• Carey, Donal.
• Clohessy, Peadar.
• Collins, Gerard.
• Connaughton, Paul.
• Connor, John.
• Cox, Pat.
• Crawford, Seymour.
• Crowley, Frank.
• Currie, Austin.
• Deasy, Austin.
• Deenihan, Jimmy.
• De Rossa, Proinsias.
• Dukes, Alan M.
• Durkan, Bernard J.
• Finucane, Michael.
• Fitzgerald, Frances.
• Flaherty, Mary.
• Flanagan, Charles.
• Foxe, Tom.
• Higgins, Jim.
• Hogan, Philip.
• Kenny, Enda.
• Lowry, Michael.
• McGahon, Brendan.
• McGinley, Dinny.
• McManus, Liz.
• Molloy, Robert.
• Nealon, Ted.
• Noonan, Michael. (Limerick East).
• O'Donnell, Liz.
• O'Keeffe, Jim.
• O'Malley, Desmond J.
• Quill, Máirín.
• Sargent, Trevor.
• Shatter, Alan.
• Sheehan, P. J.
• Yates, Ivan.

Níl

• Ahern, Dermot.
• Ahern, Noel.
• Andrews, David.
• Aylward, Liam.
• Bhreathnach, Niamh.
• Bree, Declan.
• Brennan, Matt.
• Brennan, Séamus.
• Browne, John (Wexford).
• Burke, Raphael P.
• Callely, Ivor.
• Connolly, Ger.
• Costello, Joe.
• Davern, Noel.
• Dempsey, Noel.
• de Valera, Síle.
• Ferris, Michael.
• Fitzgerald, Brian.
• Fitzgerald, Eithne.
• Flood, Chris.
• Foley, Denis.
• Gallagher, Pat the Cope.
• Gallagher, Pat.
• Geoghegan-Quinn, Máire.
• Haughey, Seán.
• Hilliard, Colm M.
• Howlin, Brendan.
• Hughes, Séamus.
• Hyland, Liam.
• Jacob, Joe.
• Kavanagh, Liam.
• Kemmy, Jim.
• Kenneally, Brendan.
• Kenny, Seán.
• Killeen, Tony.
• Kirk, Séamus.
• Lenihan, Brian.
• Leonard, Jimmy.
• Martin, Micheál.
• McCreevy, Charlie.
• McDaid, James.
• McDowell, Derek.
• Moffatt, Tom.
• Morley, P.J.
• Moynihan, Donal.
• Moynihan-Cronin, Breeda.
• Mulvihill, John.
• Ó Cuív, Éamon.
• O'Dea, Willie.
• O'Donoghue, John.
• O'Hanlon, Rory.
• O'Keeffe, Ned.
• O'Leary, John.
• O'Rourke, Mary.
• O'Sullivan, Toddy.
• Pattison, Séamus.
• Power, Seán.
• Reynolds, Albert.
• Ryan, Eoin.
• Ryan, John.
• Smith, Brendan.
• Stagg, Emmet.
• Taylor, Mervyn.
• Treacy, Noel.
• Upton, Pat.
• Wallace, Dan.
• Walsh, Joe.
• Woods, Michael.

Tellers: Tá, Deputies E. Kenny and Boylan; Níl, Deputies Dempsey and Ferris.

Question declared lost.