Waiver of Certain Tax, Interest and Penalties Bill, 1993 [Certified Money Bill] Committee and Final Stages.

Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."

I have difficulty with sections 2 and 3 of the Bill. I have outlined the reasons I am unhappy with section 2. The number of headings under which taxpayers are being excluded from the benefits of the amnesty is extraordinary and it needs to be looked at from that aspect also.

If an inspector intends to make inquiries or to take any action as specified in section 15 of the Finance Act, 1988, this is open to an extremely wide interpretation. How are we to be sure of what is in the inspector's mind? At what point did the inspector come to the conclusion to make an inquiry? I am simply saying that one category of taxpayers will apparently come in from the cold, they will benefit to the extent of paying only 15 per cent on the amount they declare. On the other hand, other taxpayers cannot avail of that opportunity if for some reason it is the intention of an inspector to investigate that person's tax affairs, so there is a question of the lack of equity in how taxpayers are being dealt with under the provisions of this section. I was not present for the Minister's response, and perhaps he dealt with this point at that time, but I wish to know the situation in that regard.

There are various other exclusions and taking all these matters into account, I wonder if there are not opposing forces at work in this. I put it to the Minister that it would be reasonable to speculate that he is dealing with another force which is endeavouring to ensure that this legislation will be as ineffective as possible. I am concerned about this section, because of the extent of the exclusions contained in it, and because I believe it reflects an imbalance in the treatment of different categories of taxpayer.

I will recapitulate on some of the points I made earlier. The areas excluded are those which I believe it is impossible to include. From the outset I have made it clear that income tax, capital gains tax and levies are allowed into the amnesty at the 15 per cent rate. VAT, if it is related to this income, is also allowed in, but the full amount will have to be paid because the Government made a decision that discounts cannot be allowed on the fiduciary taxes, and it would be entirely inequitable to start reducing taxes in cases that are at an advanced stage, where the amount has been agreed with the Revenue but not paid, cases that are with the sheriffs or the courts, or cases where attachments orders have been given.

How is the inspector's intention to be ascertained?

There must have been correspondence between the inspector and the individual. The Senator's concern as to whether any tax allowance sheet would be allowed is unfounded. There must be direct correspondence between the inspector and the individual, so that an individual would know they are under investigation. The case would have to be under examination or already entered into. A reminder notice or something like that would not suffice. The inspector must have initiated formal correspondence with the individual.

We discussed the impact of legislation such as this between compliant citizens and those who up to this moment have been evading the law. There is no point in repeating those arguments again but my reservations are as strong now as they were then, if not stronger.

That said, I am anxious to be assured that this legislation cannot in any way upset the privileged position the Revenue Commissioners have held in our law over the years in so far as much of the statute law exempts the Revenue Commissioners from limitations which apply to other citizens and properly so for the specific cases in which they are exempted. For instance, the statute of limitations, which runs against any one of us in respect of any wrong or injury, or any contract we may have entered into after three years or six years as the case may be does not run against the Revenue Commissioners in the same way. They are exempt by and large, and if at whatever time it emerges that citizens have evaded or avoided their tax liability, the Revenue Commissioners are properly free at any time to use the procedures of law to recover that money.

I wish to be assured that this waiver will not vary that fundamental role given to the Revenue Commissioners under our law over the years, so that where it emerges that there has been a failure to pay or an irregularity this cannot affect the right of the Revenue Commissioners when they discover it to prosecute those who have not met their responsibilities in the same way as compliant citizens. I hope and expect from what the Minister has said on Second Stage that the answer is that it cannot interfere with that primary right, but I would like to have confirmation of this, because this is most unique and unusual legislation in that it introduces this provision for the first time. I wish to be assured that this introduction does not cut across the rights that exist to ensure that the Revenue Commissioners will maintain their existing privilege.

The Senator is correct, the Revenue Commissioners have that primary right, and in the case of fraud or wrongdoing, or where someone is seeking to use fraud to get around Revenue's powers, that position remains. As I explained earlier, in this legislation those availing of the amnesty must tell the truth and give the full details. Other than that, Revenue can come back and get around any amnesty given to an individual. The Revenue Commissioners can come back where fraud has come to light through their own investigations or has become known to them from some other source.

In relation to the Minister's reply to Senator O'Kennedy, provided a taxpayer coming in from the cold makes a complete declaration then the capacity or powers of the Revenue cannot be used to investigate that person's case retrospectively beyond 1991?

That is correct.

All right. The other query I want to put to the Minister is this; it would be reasonable to assume that the amount of VAT you are looking at out there is limited enough, and undisclosed income would probably be a major part of that. There is no doubt, however, that capital gains would also be part of it. I think there are one or two rates of capital gains tax, one at 40 per cent and one at 30 per cent——

Forty per cent.

Forty per cent? I understand there is also a 30 per cent rate in some circumstances.

Last year I changed that to 40 per cent, so there is one rate now of 40 per cent.

Therefore, a certain sum of money declared under the amnesty and coming into the system would normally be liable to the 40 per cent capital gains tax but will now come in at 15 per cent?

If an individual who has undisclosed liabilities, either income tax or capital gains tax, pre-April 1991, comes into the system, pays the 15 per cent to the special collector, then completes their 1992-93 form prior to 31 January 1994, either amends or corrects in whatever way is deemed necessary the 1991-92 form, is not involved in fraud and remains a legitimate, compliant taxpayer after that, yes, they have the incentive that is the 15 per cent.

Question put.
The Committee divided: Tá, 24; Níl, 16.

  • Bohan, Eddie.
  • Byrne, Seán.
  • Calnan, Michael.
  • Crowley, Brian.
  • Daly, Brendan.
  • Fahey, Frank.
  • Farrell, Willie.
  • Finneran, Michael.
  • Fitzgerald, Tom.
  • Hillery, Brian.
  • Kelleher, Billy.
  • Kelly, Mary.
  • Kiely, Rory.
  • Lanigan, Mick.
  • Lydon, Don.
  • Magner, Pat.
  • Mooney, Paschal.
  • Mullooly, Brian.
  • O'Brien, Francis.
  • O'Kennedy, Michael.
  • Ormonde, Ann.
  • Roche, Dick.
  • Wall, Jack.
  • Wright, G.V.

Níl

  • Belton, Louis J.
  • Burke, Paddy.
  • Cosgrave, Liam.
  • Cotter, Bill.
  • D'Arcy, Michael.
  • Dardis, John.
  • Doyle, Joe.
  • Farrelly, John V.
  • Honan, Cathy.
  • Howard, Michael.
  • McDonagh, Jarlath.
  • Manning, Maurice.
  • Neville, Daniel.
  • Norris, David.
  • Reynolds, Gerry.
  • Ross, Shane P.N.
Tellers: Tá, Senators Mullooly and Magner; Níl, Senators Cosgrave and Neville.
Question declared carried.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."

I oppose section 3 for the same reasons I opposed section 2. As I have already dealt with those reasons, I do not propose to repeat them.

Question put.
The Committee divided: Tá, 24; Níl, 17.

  • Bohan, Eddie.
  • Byrne, Seán.
  • Calnan, Michael.
  • Crowley, Brian.
  • Daly, Brendan.
  • Fahey, Frank.
  • Farrell, Willie.
  • Finneran, Michael.
  • Fitzgerald, Tom.
  • Hillery, Brian.
  • Kelleher, Billy.
  • Kelly, Mary.
  • Kiely, Rory.
  • Lanigan, Mick.
  • Lydon, Don.
  • Magner, Pat.
  • Mooney, Paschal.
  • Mullooly, Brian.
  • O'Brien, Francis.
  • O'Kennedy, Michael.
  • Ormonde, Ann.
  • Roche, Dick.
  • Wall, Jack.
  • Wright, G.V.

Níl

  • Belton, Louis J.
  • Burke, Paddy.
  • Cosgrave, Liam.
  • Cotter, Bill.
  • D'Arcy, Michael.
  • Dardis, John.
  • Doyle, Joe.
  • Farrelly, John V.
  • Henry, Mary.
  • Honan, Cathy.
  • Howard, Michael.
  • McDonagh, Jarlath.
  • Manning, Maurice.
  • Neville, Daniel.
  • Norris, David.
  • Reynolds, Gerry.
  • Ross, Shane P.N.
Tellers: Tá, Senators Mullooly and Magner; Níl, Senators Cosgrave and Neville.
Question declared carried.
SECTION 4.
Question: "That section 4 stand part of the Bill", put and declared carried.
Sections 5 and 6 agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill".

The confidentiality provisions are obviously an essential part of this legislation. The Minister reassured us this morning, and I hope he will confirm it now on Committee Stage, that this confidentiality provision will not in any way involve the Revenue Commissioners or any of their staff in being bound not to disclose anything of a criminal nature which may emerge or be volunteered by those who claim this exemption. If it emerges in the course of these declarations that the funds have been earned through illegal activities of a variety of natures — and the law has always taken a very strict position in relation to goods or moneys gained illegally — this will not protect those who propose to benefit from this legislation from the sanction of criminal law. Otherwise this would be an unwarranted and very ill advised and inappropriate provision.

Section 7 (2) makes provision for a statutory declaration of confidentiality to be made by officers of the Revenue Commissioners. I find it difficult to accept that any officer of the Revenue Commissioners, or any other officer in the public service, should be required to make a statutory declaration of confidentiality in respect of the exemptions that will apply here. In a sense a statutory declaration is an affidavit, it is a sworn statement. I would prefer if we did not have any such provision in this legislation. Those who have benefited over the years from not paying tax should not be put in the position of requiring any official to make a statutory declaration because of their late conversion, for one reason or another, to meeting their obligations like everybody else. I would like to be assured that this statutory declaration will not in any way involve officials in having to be supportive of this kind of action which is now going to be made respectable retrospectively.

I support the thrust of what Senator O'Kennedy said with regard to the confidentiality clause. I referred to this very briefly when I was speaking on Second Stage of the Bill. It is a little worrying. I am glad the Minister, on the advice of the Dáil, removed the absurdity of a provision which would have led to fines being imposed on people in the Revenue Commissioners if they broke this confidentiality regulation. This regulation is unfortunate.

With regard to the point raised by Senator O'Kennedy about possible criminal activities in the background, I wonder if the ancient legal idea of misprision of felony comes into play there or if it has been reversed. As I am sure the House knows, any offence that would result in a sentence of two years or more constitutes a felony and if somebody, even in professional life, comes into possession of information about the commission of a crime and does not make that information directly available to the Garda Síochána he or she actually commits a crime and can be sentenced by a court. I presume Senator O'Kennedy may have been talking about drug-related moneys and the laundering of such moneys in this amnesty. I presume that unless some extraordinary provision is written into the Bill the whole principle of misprision of felony would survive and some action could be taken against these people under it. I would not like to think that was not the case, I apologise for this use of a double negative.

As I pointed out on Second Stage, I have grave misgivings about this. I pointed out — Senator O'Kennedy was not there at the time — that this was going further than even medical confidentiality where if one knew of crimes that affected a large number of people such as drug running one would have to report them. The Minister said that previous Finance Acts would deal with this situation but I thought this Bill was providing for special once-off arrangements. How would previous Finance Acts apply in these once-off arrangements?

I also raised this on Second Stage and I hope the Minister will explain why this was inserted. It goes against everything a parliamentarian believes. I do not know if there is a hidden agenda but why should this be inserted? People who have owed over £10,000 have had their names published in the newspapers and elsewhere. Why should people who until now have not paid tax be suddenly protected? As one speaker said, civil servants who disclose such information to their colleagues will be liable for this action. This provision is like a runaway horse in that we are trying to keep appeasing people. I hope the Minister can explain why it was inserted in this legislation.

I made the point on Second Stage that this could be termed the "trappist monk" provision of the Bill in that we are, so to speak, going to confession to people in the Revenue Commissioners who are hearing our sins and who are then bound to a vow of silence thereafter. Assuming that somebody made a disclosure that wasprima facie criminal, is the special commissioner bound by the same considerations in that case? This puts far too much of a restriction on the officials. What is it saying to the Revenue Commissioners who are attempting to go around the country to find out the tax improprieties that exist, the people who are trying to enforce the law on our behalf? What does it do for their morale and how will they view all of this?

To refer to the point made by Senator O'Kennedy and other Senators, I wish to make absolutely clear that the amnesty legislation will give no protection from prosecution under criminal law. As I explained earlier, people will be able to go to the special collector as they can at present. Under our tax law for over the past ten years gains from illegal activity are taxable. There will be no protection during follow-up examinations by inspectors. The central point is that this legislation will give no protection; during examinations by fraud and investigation units the benefits of the amnesty will not apply. Section 2 (2) (b) (vii) provides that relevant tax shall not include any sum:

being tax in respect of income or chargeable gains which arose from, or by reason of, an illegal source or activity (other than the evasion of tax or the non-compliance with the provisions relating to exchange control),

I quoted from this section because Senator O'Kennedy asked me to clarify which section provided for this exclusion.

Senator Belton asked why the provision on confidentiality was included in the Bill. The 1988 amnesty provided for a waiver of penalties and interest payments. Non-compliant taxpayers from outside the tax net did not avail of this amnesty. As I said earlier, of the 170,000 cases dealt with during the 1988 amnesty, under 400 were unknown to the Revenue Commissioners. I will be able to tell the House early next year whether this Bill will result in non-compliant taxpayers being brought into the tax system. However, if the Bill did not contain the confidentiality clause I could give the answer now. There would have been no point in the Select Committee of the Dáil sitting until midnight for the past fortnight and there would be no point in this House sitting late today to discuss this Bill if it did not contain the confidentiality clause because it would not work. There would be no interest in the amnesty.

The Bill does not provide absolute immunity. As I explained earlier, the process begins when non-compliant taxpayers decide to mend their ways, go to the special collector's office or, more likely, send their accountants, solicitors or advisers in and pay the undisclosed liabilities due from before April 1991. They must decide to become legitimate taxpayers. They must first get their tax certificate. Secondly, they must fill in their tax form for 1992-93 before the end of January and the process begins. If they knowingly give untrue information which they cannot stand over subsequently, the normal audit and inspector systems will investigate their affairs for a number of years regardless of whether it is bank accounts moving out of the country. If one moves one's account out of the country the Revenue Commissioners can still go back and investigate it.

It is fairly clear that by and large the people who avail of this amnesty will decide to regularise their affairs. People who pay the special collector a lump sum covering their back taxes — and remember it is all their taxes, they will pay 15 per cent income tax, capital gains tax and levies but must pay the remaining taxes including VAT, corporation tax, CAT and so on in full — would be rather unwise and I think will not be advised to pay amounts to the special collector which do not stand up in the 1992-93 tax form.

I answered Senator D'Arcy's question in his absence — he probably saw it on the monitor — but as he is now here I will give the answer again. If the individual pays their 1992-93 tax, if they have filled in the form and made a declaration to the special collector they have nothing to worry about. The answer to Senator D'Arcy's question is that they are in the clear.

Problems will only arise for people if they declare one amount to the special collector when they get their special certificate and subsequently try to submit false declarations for 1992-93. From listening to the practitioners over the past weeks, I do not think that will arise. There are people who were non-compliant taxpayers yesterday, today and probably will be in the future but that is a different matter. The Revenue Commissioners with their increased powers will continue to pursue that in the normal way. I think that answers the questions.

I wish the Minister to clarify one small point. I gave an example of a man with £0.25 million outside the country who will then introduce into the 1992-93 accounts approximately £200,000 as a kind of a windfall. What does the Revenue Commissioners treat that as in the following year?

If the commissioners are examining his 1992-93 tax return they will see that money has appeared into the system in whatever form. Presumably if the £0.25 million was gained over a number of years, only a proportion of it will appear. The inspector will check with the individual who will show their certificate that they have used the amnesty. All the special collector can tell the inspector is that the individual has used the amnesty. The individual is in the clear if the sums match.

However, they must keep their affairs regular in 1994-95, 1995-96, 1996-97 and so on as the Revenue Commissioners will immediately check the individual's affairs under the 1992-93 tax form. If they find information which is knowingly untrue they will go to the appeals commissioner and if they can prove their case the individual will lose the benefits of the amnesty.

A speaker asked today who are the people who want this. Unfortunately I do not know many millionaires but there is a category of people who are concerned about their affairs. The group I have met over the years, as I am sure have all the Senators, are people who have undeclared liabilities to the State in dormant accounts in bogus names either here or abroad who cannot get access to that money even for their own use and who worry about dying or their children's future and want to get access to the money. I think the benefit of the amnesty for them is that they can bring this money legitimately into the system and go straight from there on. There is no confidentiality after the first day if one does not follow the letter of the law. If one follows the letter of the law one is in the clear; if one does not, one will run into problems.

I presume that one declaration of confidentiality will do from one collector. He does not have to do it each time for each person. He just makes one formal declaration.

Question put and agreed to.
Sections 8 to 15, inclusive, agreed to.
Schedule agreed to.
Title agreed to.
Bill reported without recommendation.
Agreed to take remaining Stages today.
Question proposed: "That the Bill be received for final consideration."
The Seanad divided: Tá, 24; Níl, 16.

  • Bohan, Eddie.
  • Byrne, Seán.
  • Calnan, Michael.
  • Crowley, Brian.
  • Daly, Brendan.
  • Fahey, Frank.
  • Farrell, Willie.
  • Finneran, Michael.
  • Fitzgerald, Tom.
  • Hillery, Brian.
  • Kelleher, Billy.
  • Kelly, Mary.
  • Kiely, Rory.
  • Lanigan, Mick.
  • Lydon, Don.
  • Magner, Pat.
  • Mooney, Paschal.
  • Mullooly, Brian.
  • O'Brien, Francis.
  • O'Kennedy, Michael.
  • Ormonde, Ann.
  • Roche, Dick.
  • Wall, Jack.
  • Wright, G. V.

Níl

  • Belton, Louis J.
  • Burke, Paddy.
  • Cosgrave, Liam.
  • Cotter, Bill.
  • D'Arcy, Michael.
  • Dardis, John.
  • Doyle, Joe.
  • Farrelly, John V.
  • Henry, Mary.
  • Honan, Cathy.
  • Howard, Michael.
  • McDonagh, Jarlath.
  • Manning, Maurice.
  • Neville, Daniel.
  • Reynolds, Gerry.
  • Ross, Shane P. N.
Tellers: Tá, Senators Mullooly and Magner; Níl, Senators Cosgrave and Neville.
Question declared carried.
Bill ordered to be returned to the Dáil.

A Leas-Chathaoirligh, I thank you and the House for putting this Bill through in a day. We have sat for seven-and-a-half hours with only a short break. I thank the Opposition spokespersons and Senators from the Government parties for their co-operation. I hope this is the last amnesty legislation to be put before either House of the Oireachtas for many decades to come. Equally, I hope it will be successful this year and next.

On behalf of my party I thank the Minister for his usual unfailing courtesy and the care with which he treated all the points made by speakers during the course of the day. It is what we have come to expect of Deputy Ahern and he is probably the best Minister in that regard.

To add to what Senator Manning has said, I thank the Minister for staying in the House since 10.30 this morning. It is much appreciated.

I join in the thanks to the Minister. On both the Finance Bill and this Bill he has stayed with us during the day. It is much appreciated that he attended in person.

I echo the words of the Leader of the House and the Leader of the Opposition. I thank the Minister for the time he spent here and his sense of humour. I also appreciate the sense of humour shown on the Opposition and Government sides. It was a serious debate but it was handled in a good spirit. The Minister saw the Bill through from beginning to end and the House appreciates that.

On a point of order, some Senators are standing while another is speaking. Surely that is not the correct procedure?

I thank the Minister, whether people are standing or sitting, for his good humour during the debate. I do not want to seem obsequious but I hope next year I will be paying much less tax thanks to the Minister's amnesty.