Vol. 567 No. 6
50 Ms Burton asked the Minister for Finance if his attention has been drawn to reports that some of Ireland's wealthiest citizens, who have evaded taxes by using offshore trusts, are moving their money from a bank in Jersey to a Swiss bank in an attempt to avoid being detected by the Revenue Commissioners; the steps the Revenue Commissioners are taking in this regard; and if he will make a statement on the matter. [14738/03]
I am advised by the Revenue Commissioners that they are aware that Irish resident taxpayers have used offshore banking facilities in Jersey in circumstances which may have resulted in the evasion of tax. I am further advised that the overseas assets group in the commissioners' office is in the early stages of an inquiry into the matter. The inquiry will involve establishing whether there are tax liabilities and taking action to recover the tax, together with interest and penalties. The Revenue Commissioners' inquiry will also involve establishing whether breaches of tax legislation took place. As the investigations are at a preliminary stage, it is not possible to estimate the extent to which offshore trusts have been or are being used to evade tax.
I understand from the Revenue Commissioners that preliminary inquiries made following the media suggestions that funds have been moved from one institution to another indicate that the extent to which this has happened may have been overstated. The Revenue Commissioners have also informed me that they can use information relating to past transactions to identify those who have evaded tax. A move to a different bank or a different country will not alter the history of previous transactions and will not prevent or frustrate detection.
Does the Minister agree that tax avoidance is the dark side of the Irish economy? Under the Minister's stewardship, tax avoidance has become social welfare for the rich. He speaks about the poverty industry, but the tax avoidance industry is the equivalent of social welfare for the rich. Is he aware that reliable estimates suggest that assets of as much as €5 billion are offshore in various islands near this jurisdiction? These arrangements are coming to an end, but representatives of a prominent Swiss bank were in town recently to hold interviews with wealthy possible clients who may be distressed because they are facing inquiries by the Revenue Commissioners. Does the Minister agree that this type of tax avoidance – it may also be tax evasion – is eroding the confidence of the ordinary taxpayer and the working family who pay taxes but have to watch this parade of the very wealthy avoiding their taxation responsibilities?
I asked the Minister of State a question last week about a tax device being used by an Irish consortium on the Christina O boat. They were to receive about €25 million in tax breaks. What are the Minister's officials and the Revenue Commissioners doing to tackle some of the people who have offshore funds of up to €5 billion? Will these individuals be cruising to another tax haven on the Christina O, aided and abetted by the Minister's failure to take serious upfront action to tackle this scandal? We already know what was disclosed by the DIRT inquiry and the various tribunals. It was said about ten years ago that there was no pot of gold in relation to non-compliance by the rich, but that has been shown to be absolutely untrue. I want to know what steps the Minister is taking to ensure that these people pay their fair share of tax. Can the €5 billion be brought back into this country? We could do with the money to help to provide the infrastructure we are lacking.
The Deputy may have inadvertently mixed up the words "tax avoidance" and "tax evasion". She will be aware that tax avoidance is legal, but tax evasion is not. I thought she had tax evasion in mind in this question. It is tax evasion if the moneys in the offshore trusts came from taxable revenues which have not been properly disclosed in this State. I thought that the supposition in the Deputy's question was that this was tax evasion. She can be quite certain that some offshore trusts are quite legal and quite tax compliant. The Deputy should also be aware that not all funds in a foreign subsidiary of an Irish bank belong to Irish citizens. The money in other tax jurisdictions held by Irish banks does not necessarily belong to Irish citizens. No Minister for Finance in the history of the State has given the Revenue Commissioners more powers in Finance Acts to preclude tax evasion than I have. The Finance Act 1999, in particular, gave the Revenue Commissioners a host of powers that were not previously available to them. I have added to these powers in other respects.
Tax avoidance is the legal use of sections of Finance Acts or other legislation for purposes for which they were not intended. No Minister has acted as quickly as me to close off the unintended uses of legislation. I acted in this manner in the recent Finance Bill and in announcements I have made since that Bill. The Revenue Commissioners are charged with operating the tax code and are engaged in this investigation at present. The Deputy referred to Ansbacher in part of her contribution and I should point out to her that there is a later question about that issue. The total amount of money raised so far from the Ansbacher investigations is only €23 million. This process will take a long time. The tax yield from the banks and Irish citizens who paid on foot of the investigations into bogus non-resident accounts is 20 times that figure.
Is the Minister not concerned that a Swiss bank recently hosted interviews in Dublin for customers with significant assets in an Irish banking group, with a view to their becoming offshore clients? Is he not concerned that hundreds of this bank's clients were reported by the media to be lining up to get information from this Swiss bank about moving their assets further offshore to Switzerland where they would be even more protected? Does the Minister not agree that he needs to act swiftly and with imagination for the sake of the ordinary compliant taxpayer—
We must move on now to the next question.
—in order to restore confidence in the fairness and equity of the tax system? That is what is at stake.
Very briefly, Minister.
I wish to point out to the Deputy – and to any taxpayer in this regard – that there would be no benefit in transferring money to a hidden destination in any country, if the information is known to the Revenue Commissioners. It will not be of any benefit to a person even if money is taken out of the bank and buried in a hole in the garden. In the light of investigations by the Revenue Commissioners under the powers available to them, they know where the money was up to that stage. Even if you ran off with it then—
Is the Minister saying that the Revenue Commissioners know their names?
Yes, they do. In using the powers available to them, the Revenue Commissioners have come across a lot of information and know the names of many of these individuals. What will happen to them subsequently will be another day's work. People will have to account for money which is not tax cleared because the fact remains that they had the money in the first place.
An agreement was recently reached with the Swiss authorities regarding the exchange of information in regard to the savings directive which we are concluding at ECOFIN. One of the reasons we had not been able to conclude the directive up to now is that some countries within the EU, such as Luxembourg, were anxious that there would be reciprocal arrangements from non-EU countries, otherwise their cash base would be at risk. The ECOFIN ministers and Commissioner Bolkestein have more or less concluded the framework of an agreement which will allow for an exchange of information between the Swiss authorities.
We must proceed to the next question.
So if anyone is going down that particular road, he or she should think again about it.
That concludes priority questions. We move on now to other questions. I find it necessary once again to remind the House that under Standing Orders these questions are governed by a maximum limit of six minutes. Supplementary questions and answers also have a maximum of one minute each.
