Chairman, I have proposed a number of amendments to this section, and I suggest that the Minister, if he has not already done so, obtain a copy of the amendments for Report Stage. I had more leisure for consideration of this Bill this week than I had last week, and I have proposed some additional amendments for Report Stage. Should we take all the amendments I have proposed on section 13, Chairman, or do you want to take them one by one?
SECTION 13.
Debate resumed on amendment No. 67.
In page 17, subsection (1), line 24, after "1983." to insert "This section shall be extended to include insurance companies and stock exchange transactions".
—(Deputy Cox.)
Deputy Yates has also proposed some amendments. If the Members wish to discuss them in total rather than take each amendment individually the Minister has no objection.
The amendments make more sense when taken collectively.
It is agreed that amendments Nos. 67 to 77, inclusive, may be discussed together.
I wish to present the various amendments in my name and make some comments to anticipate the amendments which I have put down for Report Stage and also one general comment. On the general comment, I would like to ask the Minister — and I signalled this last week — for his opinion on section 13 and Article 37 of the Constitution. Article 37.1 of the Constitution states:
Nothing in this Constitution shall operate to invalidate the exercise of limited functions and powers of a judicial nature, in matters other than criminal matters, by any person or body of persons duly authorised by law to exercise such functions and powers, notwithstanding that such person or such body of persons is not a judge or a court appointed or established as such under this Constitution.
Article 37 provides for something which is common in practice, which is that unfair dismissals tribunals and so on have a quasi-judicial function but it is exercised outside the normal court process.
My general question — which I put as a question rather than an assertion in relation to the Constitution — relates to the fact that where an inspector of taxes has reasonable grounds to believe that a taxpayer may have mis-declared taxes and held back information, which may be available through bank accounts, and made the return false to a material extent, then that inspector has the ability under section 13 to go to the appeal commissioner to seek what is described in the Bill as "a determination". The determination, if it is granted, means that the inspector is given the ability by the appeal commissioner to scrutinise bank accounts for a period not exceeding ten years in relation to the person in question, either solely or jointly with any other person or persons, held by that particular banking institution.
Under section 18 of the Finance Act, 1983, broadly similar powers are vested in inspectors but they are obliged in that case to go to the courts to seek the equivalent of this determination. I am questioning the possible constitutional proprieties of the section because if the appeal commissioner grants to an inspector the right to inspect accounts for a period not exceeding ten years, and the evidence so collected constitutes the basis of knowledge for the inspector eventually to cause the Revenue Commissioners to go to the DPP and charge the person with a criminal offence, as would be the case under sections 9 or 11 of this Bill, it would mean that the appeal commissioner was opening up the capacity to underwrite a criminal matter.
It is not the appeal commissioner saying that he or she as appeal commissioner charges the individual non-compliant taxpayer with a criminal matter, but the criminal offence itself could not stand up as a knowingly false declaration in an instance such as this without the examination of bank accounts, given how this section is framed. If in the getting of the determination one is establishing the basis for a criminal charge, it seems that the granting of a determination by an appeal commissioner in such a context could conceivably be unconstitutional because it is the exercise of a limited function of a judicial nature in a matter which would result, if established, in being a criminal matter and such criminal matters are excluded under Article 37.
I raise that question conscious of the fact that the appeal commissioner in the determination is not directly charging the errant taxpayer with a criminal offence. However, there is no doubt that the substantive matter of collecting the evidence for a criminal offence arises as a result of the determination. It seems there is a question to be looked at and it differs from the existing law. To say that the existing practice never ran into a constitutional problem would not answer the case I am raising because the existing practice under section 18 of the Finance Act, 1983, obliges the inspector or the authorised officer of the Revenue Commissioners to go to the High Court to seek to review bank accounts.
With regard to the amendments, I informed the Minister that I wished to signal to him amendments which I put down for Report Stage. I will suggest amendments to the definition section and to section 13 of the Bill to redefine the meaning of "person" as defined in section 18 of the Finance Act, 1983, which states that:
"Person" (other than in the definition of "financial institution") means an individual who is ordinarily resident in the State.
The Minister has expressed on a number of occasions in the Dáil and in public statements his bewilderment at the extent of bank accounts held in the Republic of Ireland which I believe he stated to be as high as 15 million accounts.
The original aim of this amnesty was to recover "hot money" from abroad and it was then extended to recover what could be termed "hot money" at home, much of which may be in the form of non-resident accounts improperly held by Irish people ordinarily resident in the State but who have managed because of the laxity of the system to get away with non-resident status. Section 13 (1) states:
In this section "authorised officer", "books", "financial institution" and "person" have the same meaning as in section 18 of the Finance Act, 1983.
As I said, section 18 of the Finance Act, 1983, defines "person" as a person ordinarily resident in the State.
If somebody declares income for "Albert's amnesty" under section 2 of this Bill — which income will be subject only to clearing all taxes at a rate of 15 per cent — and they subsequently receive their certificate of immunity and their guarantee of what the Minister has described as conditional confidentiality and if non-resident accounts held by Irish residents within Ireland are removed from any subsequent potential review of bank accounts, how could it ever be established that people knowingly or falsely misled the Revenue Commissioners in respect of section 9 and the powers under section 13?
It seems that the exclusion of non-resident accounts improperly held by Irish residents means, in effect, that people who declare for the amnesty purposes of section 2 to write off their income tax, capital gains tax or levies taxation at a rate of 15 per cent then avoid the subsequent power of review of bank accounts. Such persons, even if they have knowingly and falsely misrepresented their income, if they hold their income in the form of non-resident bank accounts cannot be subject under the definition of "person" in section 18 of the Finance Act, 1983, to any subsequent review. This is a major issue in terms of the politics of what the Minister is selling. He is saying that the non-resident account can benefit from section 2 of the Bill because the Minister does not know what the declaration is based on as he cannot question the person, but that he cannot come back to get at the non-resident account later.
I know that part of the Minister's theory — this seems to be a qualm, he does not have about resident accounts but for some curious reason does have about non-resident accounts — is that the accounts could all take flight and leave the State and there would be a capital outflow. That possibility exists in any event under the powers of section 13 for resident accounts. However, even if a person who improperly opened a non-resident account in Ireland but who was ordinarily resident here decided to move the money out of the jurisdiction as a result of a change of the sort which I am suggesting, the Revenue Commissioners would still have the ability where such an account became known to them — which is highly unlikely just as they are highly unlikely to receive any information which the cheat does not want to give them in 1992-93 for all taxes — to check out the worth of that account for the previous ten years, even if they could not do it for the future.
The definition of persons and their ordinary residences has a fundamental impact. I am putting down several amendments on Report Stage which I was not able to put down on Committee Stage because I did not have a chance to review the significance of that definition in time.
I urge the Minister to amend section 13 at Report Stage so that financial institutions in Ireland opening accounts for individuals should, henceforth, demand documentary proof and evidence of ordinary residence to establish the bona fides of the person opening the account. That may not have been the practice until now, but as the Minister claims to be motivated by a need to improve tax compliance he should include an amendment requiring the banks to get proof of the identities and ordinary residences of individuals opening accounts. The ability to cheat the system by way of non-resident accounts could not arise in the future if there was due documentary evidence.
I want to run through my amendments to section 13, beginning with amendment No. 67. I note that the definition of financial institution under the Finance Act, 1983, is effectively stabbing at the domain of banking. In the Finance Bill, 1993, we went to great lengths to create a level playing field: where there were, for example, special savings accounts in financial institutions, as defined in the 1983 Act, we introduced special incentives for insurance companies etc. Since the earlier sections of this Bill leave it open to the tax cheat to use income from a variety of sources — and not just income held in accounts in financial institutions as defined here — the right of search of accounts should be wider. That could potentially include insurance company or stock exchange transactions in order to have a level playing field covering the variety of actions open to an individual.
To paraphrase section 13 (2) (b) (i), it says that where a Revenue inspector has reasonable grounds to believe a person has maintained accounts that have not been disclosed and that the maintenance of these has resulted in a return that was false to a material extent . . . In amendment No. 68 I suggest that after "is false" we should insert "to an extent that constitutes civil fraud or substantial misdeclaration". I remind the Minister that last week I defined these terms for the Commission on Taxation. The object of this amendment is to avoid including trivial cases in the law. I know the Minister will argue that the Revenue will not pursue trivial cases, but I have no doubt that in sweating information out of the three fifths of taxpayers who do pay it will not be adverse to saying that it has the power to examine their accounts for ten years even if the Office of the Revenue Commissioners does not intend to use it.
I would like a de minimus process to be included. I have used the same definition to establish the de minimus rule as last week, that where there is a civil fraud which is a serious or intentional fraud or a substantial misdeclaration, which, albeit, less serious in cost terms is serious in intent, these can be included as on “reasonable grounds” and “to a material extent”, but there should be some way of ruling out the trivial. I do not like giving anybody a set of powers with which to browbeat ordinary individuals, though they may not intend to enforce the law fully.
I will not be moving amendment No. 70 as I was not aware of the existing law under the Finance Act, 1983 when I put down that amendment.
In amendment No. 71, I am suggesting that, where a determination is being sought by the Office of the Revenue Commissioners:
The person under examination [i.e. the taxpayer] and the financial institution from which the information is being sought shall immediately on application by the inspector to the appeal commissioners be informed of that application and be entitled to attend and be represented before the appeal commissioners prior to the final determination of the matter.
I believe it would be unconstitutional under Irish jurisprudence and against natural law not to immediately inform the client involved in the tax review and the institution that has to show the accounts. I do not believe it is right for a Revenue employee to go to the appeal commissioners without being immediately required to notify the potential parties to any dispute which could arise. A failure to make that explicit in the law would offend natural justice and I believe raise questions concerning individual's constitutional rights which would ultimately be decided by the courts.
Amendment No. 76 relates to the idea in section 13 (6) that a financial institution which fails to comply with the determination issued by the appeal commissioners "shall be liable to a penalty of £15,000" and further penalties of "£2,000 for each day for which the failure so continues". I suggest that should only be put into operation through the courts. It is unclear who will issue the bank with the fine and on whose authority they will do so. What right of appeal is there if the bank or the financial institution is aggrieved at the outcome? In the absence of a procedure I have specified one that would involve the High Court. If this is not accepted I wish to know the specific procedure the Minister has in mind in relation to this.
Apparently I cannot move amendment No. 77 as it would involve a charge on the State. Apart from the fact that section 18 of the Finance Act, 1983, obliges the authorised officer to go to the High Court it is very similar to section 13 of this Bill. Before we grant new powers I want to know what use Revenue has made of the existing powers. It is not enough to say the courts are contrary and do not understand the Minister's intention in making law. How many cases have Revenue brought to court under section 18 of the 1983 Act and how many have succeeded and failed in relation to obtaining reviews of accounts? What has been the nature of the failure in the cases taken?
If the High Court took a view that a Revenue officer did not have reasonable grounds and that the complaint did not make a difference to a material extent as defined in law, the court would have been right to decide not to give leave to review the accounts. I am worried that the Minister is asking us to grant additional powers to the Office of the Revenue Commissioners, through an easier route than the courts, which may be unconstitutional and is being done without a full account of the existing stewardship. The Minister is not entitled to look for extended rights without this committee being given a full account of the worth and use of the existing rights.
There are two broad aspects to section 13. The first is the need to track down tax evaders who have used financial institutions so as not to reveal tax liabilities. I believe there is broad agreement that we should pursue such people.
The other aspect is the effect on the financial services sector. I have been inundated with representations from that sector expressing alarm and grave concern at the provisions in this Bill and section 13 in particular. We should tease it out. I have questions the Minister may be able to clarify and also points to make.
Non-Government deposits in all licensed banks stood at £11.7 billion last November, according to Central Bank figures. The figure today is of the order of £13 billion on deposit. The Central Bank breakdown of these figures indicates nearly 43 per cent of deposits belong to individuals rather than corporations or companies from whatever sector.
At the moment there are three types of confidentiality. Two forms must be filled for non-resident accounts. Form F asks for address and country of residence and the other form is for the Revenue Commissioners to give them a register of these accounts.
The second type applies to the special accounts on which 10 per cent DIRT is paid. For these one must declare who one is and the amount of money involved.
I will focus on the third category. This relates to those paying 27 per cent tax. In this year's Finance Bill the Minister provided for these people to pay no more than that in tax. That was their full and final liability. From the banking fraternity I understand heretofore the 27 per cent tax accounts were on a fully confidential basis; 27 per cent tax was paid on interest income and one of the advantages of DIRT was that no further liability would arise. Banks have indicated they have deep reservations about the Revenue Commissioners having access to these accounts for trawling purposes.
We should first establish the mobility of capital. I tabled a Dáil question to the Minister on 15 June to clarify the relationship between the Irish Revenue Commissioners and the Inland Revenue in Great Britain and Northern Ireland. I wished to know if someone makes a deposit in the UK in a non-resident account whether that information would reach the Revenue Commissioners here, given the removal of exchange controls.
It is clear it does not because the Ireland/United Kingdom Double Taxation Convention of 1976 and the Model Taxation Convention of the OECD published in 1977 both clearly state it does not require the disclosure of information that would be contrary to the laws and administrative practice or could not be obtained under the laws in the normal course of administration of either of the treaty partner countries. Information which would disclose a trade, business, industrial, commercial or professional secret or trade process or information, the disclosure of which would be contrary to public policy, also need not be exchanged.
If a person has money in a bank and is paying 27 per cent tax, does section 17 indicate to that person he or she must immediately move this money to Newry? There confidentiality is guaranteed. I fear this Bill will contain an ultimate irony. A measure designed to bring £4 billion back to Ireland will have the effect of sending money abroad. There is no problem with having the necessary legal authority to pursue tax evasion through financial institutions, notwithstanding that it must be done in a way that protects the deposit base of £13 billion in the licensed banking community.
Specific representations were made to me on this matter and my amendments Nos. 72 and 73 relate to what constitutes "reasonable grounds" and what is a "material extent". Section 13 (2) (b) (i) outlines how the appeal commissioner will decide whether to give access to the bank account information. Who is to say the said return of income is false "to a material extent"? To some it may be £2,000 and to others £200 million. What is the "material extent"?
The two political appointees, the appeal commissioners, have to adjudicate this matter. There is no case law because this was previously administered by the High Court. Presumably the new system will provide easier access but it is a lottery and issues will be referred to the High Court and possibly the Supreme Court. I propose the Minister outline clear, transparent, unambiguous regulations to define "reasonable grounds" and "material extent". The phrases are too vague currently.
I have been advised the 30-day period for a financial institution to reply to the Revenue Commissioners may be insufficient in some cases. This relates to section 13 (5) (b). I ask the Minister to consider extending that to 60 days or to insert a flexible clause allowing a reply no later than a certain period.
There is potential for distortion of competition in the financial services sector. Building societies were treated preferentially on disclosure and secrecy issues heretofore. That is not entirely the case at present. The Minister should clarify the figure of the 15 million accounts. Banking sources tell me the total of both resident and non-resident deposit accounts was 4.9 million in 1990. In 1991 the figure was 5.09 million and in 1992 5.25 million.
If there are another 10 million deposit accounts, even allowing for them being in children's names, the building societies must have a huge number of deposits. Can this be explained otherwise? The Minister should assure us there will be no distortion of competition between building societies, banks or any other financial institution in the effect of section 13 of the Bill.
Because of the concerns we have voiced about the perhaps irrational behaviour of depositors who may fear the measures of this Bill and move money abroad, safeguards must be put in place. This must not be a random procedure used by the Revenue Commissioners to trawl through all accounts. A sensible step would be that any case to be brought before the appeal commissioners should require the prior approval of the board of the Revenue Commissioners. It is reasonable that this happen and it has been sought by the banking federation. As the appeal commissioner will have authority to approve applications from authorised officers it is appropriate financial institutions in turn have the right to appeal through the same channel.
The only matter of agreement between the Revenue Commissioners and banking interests on this issue is the British legislation. Section 20 (8) (b) of the Taxes Management Act, 1970, is what they deem to be reasonable. That operates in Northern Ireland and both AIB and the Bank of Ireland have an extensive branch network there. That seems acceptable. On first reading I thought this Bill contained a direct copy of that provision but I am advised this is not the case. Specifically, in Northern Ireland and the UK the banks have a right, where the Revenue Commissioners are proceeding to examine an account, to appeal to the appeal commissioners. In other words it is a two-way street, they have the same rights as the Revenue Commissioners. That facility is provided for in the Taxes Management Act, 1970, in the UK. I ask the Minister to consider inserting such a provision in this Bill. Also, in relation to its operation, requests for information by the Revenue Commissioners should be specific to the bank branch, that is, they should give the individual name and account number.
Throughout this debate the Minister repeatedly argued that his primary concern was to maximise the tax yield and ensure a new body of compliant taxpayers. Using his own criteria I do not see how section 13 is essential to the success of the tax amnesty, which seems to be his major preoccupation.
I have also received representations from the Incorporated Law Society, the friends of Deputy Rabbitte, about this matter. Deputy Cox deals with this point adequately in amendment No. 71 — which I support — that where the Revenue Commissioners appeal to the appeal commissioners to obtain access to a financial account, this procedure should be made known to the individual concerned. That is reasonable. The provisions, as they stand, appear to allow the Revenue Commissioners to make applications to the appeal commissioners on an ex parte basis, that is without notice to the individual concerned. It should be a fundamental principle of our law that the other party to the proceedings should be given notice and allowed to be heard at any determination by the appeal commissioners. I support amendment No. 71 in that regard. Individuals should also be allowed to appeal to the appeal commissioners or to a judge of the Circuit Court. It is the considered view of the Incorporated Law Society that the provisions of section 13 are more stringent than section 20 of the Taxes Management Act in the UK.
It is interesting to recall the debate last year and this year when the Minister introduced the special 10 per cent deposit interest retention tax accounts. The Minister told a little anecdote during the debate on Committee Stage of this year's Finance Bill about the German experience where, when a similar tax was set at a particular rate, there was an outflow of deposits and the Minister for Finance had to resign. This focused the Minister's mind particularly sharply in his treatment of tax deposits in so far as he did not want to follow that route.
I have been given information in relation to the growth of financial services sectors abroad. Dublin, through the International Financial Services Centre, is part of this sector. The extent to which member states of the European Community, not just Luxembourg and other countries which have prided themselves on this, are now developing particular centres to deal with these types of deposits which may flow out, is quite staggering. Portugal is promoting the island of Maderia as a new offshore centre and Italy is promoting the city of Trieste. Money held in such deposits is inaccessible to tax authorities anywhere and no taxation is levied on interest income. We are speaking in the region of up to 50 per cent of the GDP of these countries. The Channel Islands, the Isle of Man, Jersey and Guernsey, just those close at hand, are crying out for the money. They will market section 13 of this Bill to maximise capital outflows. My great fear is that the provisions of this section might inadvertently have the effect of chasing money overseas.
I wish to bring the Minister's attention to the fifth report of the Commission on Taxation, in particular to page 179. The Commission went to the trouble of consulting extensively with the Central Bank prior to making its recommendations. Both the Commission and the Central Bank expressed the view that if there was unrestricted access to customers' accounts by the Revenue Commissioners it would be difficult to maintain confidence in the normal relationship between banks and their customers. The Central Bank, in particular, expressed concern that the erosion of that confidence would result in an outflow of funds. I am not saying that this section provides unrestricted access but the question must be raised whether customers will appreciate the distinction.
It is also up to the Minister to explain how section 18 of the Finance Act, 1983, which already enables the Revenue Commissioners to apply to the High Court for an order requiring a financial institution to furnish full particulars of all accounts maintained by any person, is inadequate. There is a view that the existing legislation strikes a balance between the conflicting interests of the need to ensure that taxpayers are compliant and the need of the financial institutions to have an ample deposit base.
The Minister has lectured us all on the need for the availability of credit for small business. He has lectured those operating pension funds about the need to make £100 million available for seed capital. The 10 per cent tax which applies to a whole range of products is designed to make equity capital available. If one looks at the lending base of the financial institutions from November 1992 one will see that 30.6 per cent of it is personal but the remainder is for business. Agriculture, forestry and fishing account for 9.2 per cent, manufacturing accounts for 12.4 per cent, distribution, hotels and catering account for 12.2 per cent, financial services account for 16.3 per cent and 13 per cent is devoted to business and other services. The money we are talking about is the lifeblood of funds for business, employment creation and developmental capital. We must, therefore, strike a balance here.
I am not saying I will necessarily oppose section 13. It can be improved by the variety of amendments that have been put down, but I remain to be convinced that the concerns expressed by the financial services sector and, particularly by the banks, have been adequately addressed. It is possible for this process to be initiated by an officer of the Revenue Commissioners. We should ensure that this is not done at random for fear that there will be an outflow of money abroad.
I also wish to speak about non-resident accounts. My understanding is, and I think the banking community would admit this privately, that up to about five or six years ago it was possible for residents to open non-resident accounts. In other words, non-compliant taxpayers would tell their local friendly bank managers that if their banks would not be accommodating they knew of other banks that would and they would head off with their funds. It is also true that there has been a sanitising process in the last four to five years and that banks have an innate sense of knowing who has money and its source. The right balance needs to be struck here.
I favour tougher measures to deal with the proceeds if illegality, drug trafficking and money laundering in relation to our financial institutions. There is an EC directive in this regard which imposes very strict measures on financial institutions for aiding and abetting money laundering. I urge the Minister to bring this forward. I am concerned about the person with a relatively small deposit who can switch this money to Northern Ireland and the person with a larger deposit who can switch it to an offshore centre. This provision would result in a net outflow of funds because people in the higher income bracket would be able to move their money to an offshore centre. We have heard the arguments from Government TDs about the shortage of cash flow in the economy and the need to bring capital home to boost cash flow and credit facilities. It would be the ultimate irony if a provision in this Bill, which was not originally announced, had the opposite effect. Therefore, I ask the Minister not only to consider tax evaders, for whom I have no sympathy, but the financial services sector and how this underpins their business.
I have also been plied with information from the financial institutions. The opportunity to speak to them did not present itself because of the manner in which we have been required to process the Bill. It was not out of disrespect for the institutions.
There is a need for clarity if the Minister is, on the one hand, seeking to end serious tax evasion, and on the other hand, retaining some aspirations of becoming like Liechtenstein, Jersey, Madeira, Trieste or Palermo. If we retain any such aspiration, then a schizophrenic approach is required in the law. Perhaps we must accept that playing host to big time tax evaders is a major element in some economies. It is not a major element in our economy. We strive for equality before the law and we treat taxpayers and citizens equitably. We must make a decision on this matter.
I agree with Deputy Yates that anything which damages the deposit base of the financial institutions damages the economy. If we fail to protect the deposit base, it will have inevitable consequences for interest rates and the economy. However, notwithstanding what has been said, I believe that the Bill relates to big time taxpayers, although the granny from Connemara has been frequently mentioned here and on radio. These taxpayers will, if it suits them, move their money out of this country. They have proven by definition that they are not patriotic and that they do not care about the Irish economy.
One of the most serious criticisms of this Bill is that it is creating an amnesty culture. We are creating a belief that if the Revenue Commissioners are obstructed for a lengthy period, another amnesty will be granted. As I said last week, this is similar to the situation which the unfortunate citizens of my constituency face. They do not know when the next Tallaght bus is coming, but if they wait long enough it will come.
As I understand it, the Minister is attempting to send out signals in this and the preceding sections that, on the one hand, the carrot is the extraordinarily generous reward for people who have broken the tax laws and who have lied to the Revenue Commissioners, while, on the other hand, he will tighten the tax collection system and introduce certain penalties as a big stick to do that. The argument is whether section 13 of the Bill is excessively unreasonable or intrusive, or if it inhibits people's civil liberties.
Most citizens fall into the category of the granny in Connemara. They would not like to believe that we are enacting legislation which would invite the Revenue Commissioners to analyse people's bank accounts or post office savings. Ironically, the fact that 93 per cent of people do not have any reason to fear this, does not dispel their dislike for a law which says that this right exists. I would not support this section if I thought it was giving that power to the Revenue Commissioners. I do not believe it is and I await the Minister's reply to the pertinent questions which have been asked by Deputy Yates and Deputy Cox in relation to this issue.
It seems to me that this power will be used sparingly and that the tax officer must have reasonable grounds before he can intrude. Reasonable grounds have a definite tradition in common law and will be clearly understood. Action may be taken to prevent such intrusion, if the officer is suspected of acting unreasonably.
In his amendment, Deputy Yates mentioned "to a material extent". This is a key element in terms of judging whether this is a fair power in relation to the furnishing of certain information by financial institutions. Perhaps Deputy Yates is correct in so far as "to a material extent" could mean different things, depending on one's view. There are safeguards in the form of procedures which the tax officer must go through before he is given that authorisation.
I do not know if the phraseology in Deputy Cox's amendment No. 68 is better than the phraseology in Deputy Yates's amendment. He requires us to insert "or substanial misdeclaration". It seems to me that the same difficulty may arise in interpreting "substantial" as in interpreting "material".
The second element of Deputy Cox's amendment relates to the suspicion of misdeclaration, false statement or concealment, amounting to civil fraud. I would like to hear what Deputy Cox means by "civil fraud" in this context. It is a long time since I studied law and I am not sure what it means in this context. I am not sure it is desirable.
We should compare section 13 of this Bill with section 18 of the Finance Act, 1983. I do not have section 18 in front of me, but I read it carefully on Second Stage of this Bill. It is extraordinarily draconian. For some reason it has never been used and there has been only one brief imprisonment, despite the powers conferred by section 18. This probably relates to the Minister's statement last week about the political culture in which we operate. It has not been acceptable to evoke the powers of section 18 of the Finance Act, 1983.
It has not been acceptable to our political culture and the political will is not there to do it. Apart from this requirement to go to the High Court, in some ways, section 18 confers far more power on the Revenue Commissioners than section 13 of this Bill, which is hedged around the requirement of having "reasonable grounds" before the officer of the Revenue Commissioners can proceed.
The Opposition spokespersons have been united in regard to the introduction of this Bill and its treatment of tax cheats and fraudsters compared to the treatment of law-abiding tax compliant citizens. However, this section is more window dressing on the lines of section 18 of the Finance Act, 1983, than any threat to citizens' civil liberties. There must be reasonable grounds to suspect continuing non-compliance by certain people before it can be invoked. Ultimately, the question is whether we have one set of tax laws for those who have no opportunity to conceal, avoid, evade and escape abroad, and a different set of tax laws for those who can pay for expert tax advice and, as a result, exploit the loopholes that undoubtedly exist, and will exist, regardless of what tax legislation is introduced, to avoid paying their fair share.
Last year the debate was taken out of the hands of the Opposition spokespersons when a great number of Deputies, from all sides of the House, complained in the most extraordinarily bitter terms about measures being introduced by the Minister to remove certain tax shelters and give certain powers to the Revenue Commissioners. When that legislation was enacted on that May evening I thought the traffic lights would stop working and that it would be the end of civilisation as we knew it. It does not seem to have turned out that way and, on balance, I do not think it will in this case.
I would like clarification regarding this section. There were reservations about giving what were referred to as "tax cheats" an opportunity to come into the system, and now reservations are being expressed with regard to people who might be cheating in other ways.
Social welfare recipients or applicants for non-contributory social welfare payments are dealt with extremely severely. Representations were made, not from banks or financial institutions, but from the people themselves who were trying to get a non-contributory pension having reached the age of 66. Their past life is investigated and consent is required to inquire about money thay may have in banks, building societies, credit unions or the post office. If that consent is not forthcoming, the attitude of social welfare is that the individual refused to give them the information so they do not get an old age pension. Opposition spokespersons did not express concern about how we deal with people in that category. Deputy Yates went on to say that the financial institutions were extremely worried that 26 per cent——
Deputy Ferris——
He has the same right as Deputy Cox——
I have absolutely no problem with that but we are not debating social welfare legislation.
I want to ensure that everybody is treated with the same degree of fair play, as the Minister wants to do in the balance between the carrot and the stick. Nobody wants draconian measures since we are a race of people who generally try to live within the regulations.
Much of the advice in the past which led to the extraordinary number of deposit accounts in tbis country was given by financial institutions. At a time when you had £1,000 on deposit and it earned £100 pounds interest, the bank manager advised that the next £1,000, if you had it, should be deposited in a branch of another bank. Bank branches in towns and villages around the country had accounts with £1,000 in each of them so that nobody would have to pay tax on interest of over £100 for a married couple.
I agree with Deputy Rabbitte that many of these accounts are held by grannies who have a few pounds there to bury themselves, as they say. Any Deputy who deals with people processing social welfare pensions will know that they will say they have a few pounds to bury themselves because they are afraid of not having a decent funeral.
Deputy Yates said that the banking institutions are afraid of an outflow of money. This was the attitude adopted when the DIRT was introduced. It was said that billions would flow out of the country but they did not because there were more restrictive regimes in operation in other countries, apart from the few identified as havens by Deputy Rabbitte. However, there was no clean sheet whereby if one paid the DIRT everything else was forgotten. There was always an obligation on taxpayers on higher rates of tax, to disclose in their form 12 tax return any extra income they had after paying the DIRT. I do not know whether their banks advised them of that but I am sure they did. However, did depositors disclose that in their other declaration? They paid the DIRT at 27 per cent and believed that they had fulfilled their obligations. Yet we know that is not the case.
Will the Minister indicate from experience since 1 January 1993 when the special 10 per cent DIRT was introduced and where there is no obligation to disclose any other income above the payment of this 10 per cent, if an increased number of these special accounts have been opened and if other accounts have been closed? There is an opportunity for people to invest money at 10 per cent in one special DIRT rate account on which there is no other legal liability to pay additional tax. The DIRT, in its time, brought in around £200 million and that gives an idea of the amount of money deposited and on which tax was paid by banking institutions. There was still a legal obligation on people to ensure that their tax affairs were disclosed properly.
Whether we are talking about small or large scale fraud, about grannies or people in one category, everything is comparable in monetary terms. If one is a big-time cheat with a large amount of money, one can afford to get the best possible advice and live within certain jurisdictions. When the Minister is replying he might identify changes in the pattern of savings accounts or whether he has that information available under existing legislation. Will he also indicate why section 18 of the Finance Act, 1983, was not used in the past and whether this is an extension of it? Is this to give the impression to people that powers are available to follow them if they do not take advantage of the amnesty and from now on they will all be subject to the same criteria?
A great number of questions have been asked and I will do my utmost to answer them in as much detail as I can. We have endeavoured, in so far as we can, to make section 13 a balanced, reasonable and sensible measure that will not create difficulties. Since the adjournment of this committee on Friday, 2 July 1993 I have considered some amendments and have endeavoured to allay any genuine fears. I have had the opportunity in that time to consult with those who are concerned about different sections of the Bill and have considered the suggestions made by Deputies Cox, Yates and Rabbitte. I am anxious to ensure that this proposed legislation does not upset either that tired old lady from Connemara or others and in this respect the Bill attempts to strike a proper balance.
Regarding my views on section 13 of the Bill, let me allay any fear that there is anything draconian in the measures proposed by the section. As the learned Members of the committee are no doubt aware, the word draconian derives from the name Drako, a seventh century BC Greek statesman who prescribed the death penalty for every offence under the legal code formulated in 621 BC. I can assure the committee that any measures proposed in this Bill are not so severe.
Deputy Cox questioned the constitutionality of certain aspects of the Bill. The Attorney General has considered the Bill in detail, however the concerns raised by Deputy Cox deserves a response. The issue of determination by the appeal commissioners is an executive rather than a judicial function. The power to issue a determination of the appeal commissioners is not contrary to Article 37 of the Constitution as it is part of the process of an investigation by the inspector in much the same way as the Garda obtain search warrants for their investigations.
The High Court has held that the issue of such warrants is an executive rather than a judicial case and I understand that in 1985 the Supreme Court considered this matter and ruled accordingly. Therefore Deputy Cox can be assured that no difficulties arise on this issue.
Regarding the question of bogus, non-residence accounts, the Deputy stated that he did not have the opportunity to consider this matter in advance and that he would propose some amendments at Committee Stage. May I invite Deputy Cox to consider section 13 of the Bill again. The Deputy quoted section 13 (1):
In this section "authorised officer", "books", "financial institution" and "person" have the same meaning as in section 18 of the Finance Act, 1983.
This position is catered for in section 13 (2) (i) which deals with a person who has a right to withdraw moneys and states that an authorised officer may, if he—
has reasonable grounds to believe that the person maintains or maintained an account or accounts (being an account or accounts from which the person may withdraw monies), . . .
The words in synthesis are the relevant words on this point, as it means that the bogus non residence accounts are caught by the section because non residents, as they would have the right to withdraw moneys, are included.
All Deputies questioned as to why the measures in section 18 of the Finance Act, 1983, which were so difficult, produced no results. Deputy Yates and the other Opposition spokespersons are fulfilling their roles when they say that measures proposed in this Bill may be very difficult in comparison with measures in previous legislation. The facts are, and Deputy Cox has sought clarification on this, that the first case under section 18 of the Finance Act, 1983 arose in 1985 and was dismissed by the High Court and subsequently by the Supreme Court as an essential pre-condition was not fulfilled.
There were many subsequent cases. However, the relevant legislative measures collapsed in 1985 in the High Court when in the course of the judgment the High Court Justice referred to the section as having far reaching effects, as being in breach of the traditional bond between the banker and his customer. Subsequently in the Supreme Court the Chief Justice referred to the wide and drastic nature of the section.
Over the years there have been several cases and other applications have been made by inspectors. However, these have not proceeded, mainly because having regard to the 1985 Supreme Court decision, it was felt that the applications were unwarranted, were premature or could not be sustained on the facts of the case. As I have already made clear to the Committee, there are arms of the Constitution, the Legislature is one such branch and the Judiciary another. The Judiciary have a task to fulfil and when they adjudicate on legislation, their decision must be accepted.
The traditional bond between the banker and the customer is of major importance and for that reason further consideration must be given to the measures established in the Finance Act, 1983, especially given the concerns that have been expressed about the viability of the reasonable grounds and material information aspects. In 1983 it was established that an authorised officer could act on an opinion that a person maintains or maintained an account or accounts. The qualification of reasonable grounds did not apply. Thus, for example, if the authorised official went to lunch and observed someone he knew to be a non-compliant tax payer entering a restaurant he could act on his opinion about that person. There has been considerable movement away from that situation——
The opinion had to be whether the declaration was false to a material extent, and that is being maintained. It was not a casual opinion. It had to be an opinion to a material extent.
However, the point is that the authorised officer did not have to establish the opinion. He merely had to hold such an opinion. It is for that reason that we have moved from that position.
Deputy Yates made a similar point earlier. The Revenue Commissioners could act with extreme ease.
The IMF was asked by a previous Government to undertake an examination of the scheme for self-assessment of direct taxation in Ireland. The ensuing report, entitled "A Scheme for the Self-assessment of Direct Taxes in Ireland", was presented to the then Government on 2 February 1987 from the Fiscal Affairs Department of the IMF. Regarding the banks, I quote from page 29 paragraph 22 of the report:
Although the Revenue Commissioners do not have a general power to seek information from a bank about transactions with its customers, they may apply to a judge of the High Court for that authority. Information may be sought regarding accounts maintained during a period of ten years prior to the date of application. The need to require court action can be cumbersome and time consuming. This power, without the need for court action, should be granted to the Revenue Commissioners, with the authority to delegate to appropriately senior levels of the organisation.
That was the advice we received when the section on self-assessment was introduced.
Deputy Yates referred to the Tax Management Act, 1970. Although there are many provisions in that Act our banking colleagues quoted one particular aspect. I wish to deal with their points because I checked this in detail over the weekend. They are talking about section 28 (a). The point Deputy Yates made is one they made to me regarding a power in UK legislation which can be used in very limited and confined circumstances, where a banking institution can make an appeal to the commissioner, which is similar to our commissioner. Under section 20 (a) of the Taxes Management Act, 1970, the notice under section 23 may be given without naming the taxpayer to whom it relates but a special commissioner must give his consent to the application which must have been approved by the board. Section 28 (b) of the Taxes and Management Act, 1970, permits a person, on whom a notice under section 28 (a) has been served, where the taxpayer is not named, to object to the notice on the grounds that to comply would be too onerous and to have the matter referred to special commissions for decision. This facility does not apply to a notice.
It is with regard to those circumstances that the banks are giving us a bum steer in relation to a possible case where the taxpayer is not named and the Revenue Commission inspector is going to a bank on the basis of a number with no details, where they do not know anything about the individual. I will not follow the example of the UK legislation or the road of the IMF — perhaps I should — or the tough road of the 1983 legislation.
The Deputies made two points which I should take into account. One relates to a case going to the appeal commissioners to which the board of the Revenue Commissioners, as Deputy Yates asked, should give approval. I have the executive function and I can ask the board of the Revenue Commissioners to do that. I do not have to do that by amendment, I will do it by ministerial order and that will keep a tight grip on this matter.
The second point relates to the 30 day rule about which there has been much play. We are discussing a decision of the Revenue Commissioners, in relation to which the board of the Revenue Commissioners agrees it wants to go after an individual's account and names that individual. Naturally they do not have the account number. It has been put forward that they should have the account number but if that were so they would not need to look for the account. The Inspector of Taxes tells the appeal commissioners that it wants to investigate a case which will take some time and that 30 days thereafter there must be action. It is a long period, it is not 30 days in total. It is 30 days from the date of the appeal commissioners making a decision. It will take some time anyway — a long time, unfortunately — to get to that stage and it is 30 days from there so there is no difficulty.
Deputies Yates, Cox and Rabbitte mentioned another aspect. We should not penalise somebody unfairly. The position ensures that the board of the Revenue Commissioners must make the decision. I would reject the type of case where, for example, the inspector was to go after the lady from Connemara or a similar case, we ensure this will not happen by giving the decision to the board of the Revenue Commissioners. If a bigger case is heard by the appeal commissioners, under the legislation as it stands, the commissioner will be there making a case on various grounds and the institution will be there making its case. The legislation does not provide for an individual to make a case on various grounds. On consideration, there is a valid point being made in that regard. We should not argue about it and we will allow an individual in as well so that all present can make their cases. There would be three parties at the hearing. I will bring forward an amendment to that.
In all cases?
Yes, in all cases that would go to an appeal commissioner. That means that they can all put forward their cases and trash out the reasonable data.
I lost the train of thought and I wish to clarify one point. The Minsiter went through the case where the High Court judge said that it was an invasion of the bond between the bank. Is the Minister saying that section 18 of the 1983 Act was never enforced or was that changed subsequently?
No. Over the years the Revenue Commissioners kept coming back with cases. A reason was always found——
So it has never been allowed?
There were some circumstances in which they got access.
Since 1983, approximately how many cases have gone the whole way?
Two. I made this point the other day and I do not want to go back over it again.
It is no wonder that the Minister is going to the appeal commissioner.
The point is that there was an opinion but quite frankly——
What the Minister is saying is that he is fed up with the courts.
I made my case on this the other day. It is clear. Bearing in mind that there was an amnesty in 1988, ten years is long enough to get a good judgment as to the strength of a section. It was put there by an experienced Minister of the day, who was Minister for Finance for quite some time. It was put to the courts and the reality is that no matter what way the Revenue Commissioners turned, a reason was found. I do not wish to argue about it but the reasons included some technicality, that there was a return missed for one of the years in question, that there was some delay, etc. I will not go into it because I would say something I do not want to say. There was always some reason found and it did not work, only two went through the system.
Two went through out of how many that were attempted?
There were several.
I am trying to figure it out. If it is two out of a thousand then clearly the view between the legislator and the administrator of justice is serious. If it is two out of four, then perhaps the Minister is making a mountain out of a mole-hill. How many cases were actually brought to the courts?
There were several cases.
Could we count them on two hands?
I do not have the figure.
It is of some material worth, the weight of the cases and whether the courts have frustrated the Revenue Commissioners or whether the Revenue Commissioners do not use the power very much.
There have been several applications.
A great number. Would we be able to get the number by Report Stage?
I will try.
It would be interesting to know because of the material difference between what is being suggested and the current system. Apart from any fear about the technical detail which the Minister has just described, what proportion of what he looks for will he get through?
The cases filtering through the system were only those the inspector was prepared to pursue. The inspector gave them to his senior officer who gave them to the board. The board then gave them to the Revenue Commissioners' solicitors who gave them to the DPP. One had to go through that system and many cases were discarded. When we finally got to court, only a few got through. That is why I am adopting a different approach. One does not have to be a lawyer or a banker to see that the courts hold the view there is a bond between the banker and his customer. I spoke last week about this difficulty——
A noose in some cases.
We are taking a different route now. We are going to the appeal commissioners which allow the bank, the individual and the Revenue Commissioners to put their case. This is not in any way draconian. It would not make anyone move £1 out of a bank account if they understood it and I think it is——
Did the bankers tell the Minister that at the weekend?
The bankers told me a few things which I have checked and have been told are incorrect but, in relation to capital outflow, the banks made one point about the 30 day rule. The appeal commissioners are not allowed to act on the view of an inspector, the individual is allowed to make his case and the banks are happy with that provision. There are individuals with large sums of money, between £10 million and £50 million, and a drop or increase in interest rates by a quarter of 1 per cent is enough to make them move, those kinds of movements happen all the time. Deputy Rabbitte made a valid point in that the number of people with money on the side is quite small. The Revenue Commissioners, under this system, will not bother with those people.
With regard to a point which Deputy Cox made previously, I am trying to work on an amendment whereby fines would be imposed on a graduated basis before an individual would receive a prison sentence. I took his point and worked on it and I hope it will be ready this afternoon. It is quite frightening when one sees that the Revenue Commissioners only try to fight the big cases although one can see why there is no point in trying to do anything else. There is no evidence of an impact on residents' deposits from a change in disclosure. I accept the Opposition points on the amendments and I am satisfied that the Bill strikes a reasonable balance in its approach to the Revenue Commissioners' access to bank details, given that an appeal commissioner's determination must be obtained before the Revenue Commissioners can obtain details of the accounts.
In relation to the fines that can be imposed on a finacial institution for failure to comply, who does that and how is it processed?
Can we take amendments to No. 76?
I will take No. 76. Deputy Cox's amendment seeks a situation where penalties can only be imposed on a financial institution if the authorised officer established the facts to the satisfaction of the High Court. Under the present law, the penalties only arise where the conditions in the section are satisfied. The penalties will be sued for in the appropriate court which will only impose penalties if it is satisfied.
So, it has to go to court?
Yes.
That was my essential point, I wondered if the Minister was giving someone the right to impose fines.
No, it has to go to the court. I think that I have covered most of the points. If I have not maybe the Deputies would point it out.
Is amendment No. 67 being pressed?
Can we have a general discussion on some of the points which the Minister made?
I would like to clarify one or two points. The Minister said that he will try to find out, if he can, how many cases were brought and I would like to know the number of stages through which they must be brought. The Minister is cutting out many stages so presumably he will potentially add much meat to what we are looking at here.
Those stages would still be there for a case going to the courts.
In the end, but what is the situation with a case which is examining a bank account? The Minister mentioned a Supreme Court decision. Will he give a reference for it because I would like to know the jurisprudence in the case? While we can change the system, we cannot change the implied rights of individuals under the Constitution. The Supreme Court will have set some kind of jurisprudence in the case. When someone wants to get access to the details of an account — I may be open to correction on this because the Minister was dealing with a technical point under a Tax Management Act, 1970 — but he mentioned——
They were making the point that we should allow an amendment but that amendment was in relation to a particular circumstance.
If an authorised officer wants to check the bank accounts of an individual, will the authorised officer say that he wants to see, for a period not exceeding ten years, all the accounts held by that individual or a specific account in a specific branch? I am not clear as to how detailed the examination will be. I ask this because there appear to be two possibilities. It could be a very wide power or the compliance costs could be staggering if the Minister goes out with a kind of a monofilament net approach that lets nothing through. There should be some reasonable grounds for knowing what he is chasing and where.
If there were no appeal commissioners one would be doing that but the inspector has to go in front of the appeal commissioners and make a case based on reasonable grounds. The individual can use his material circumstances and argue his case in defence under the Act. If an inspector were to come and say to the appeal commissioners that he believes an individual has bank accounts without having particular information or facts, the appeal commissioners will not give leave to chase such accounts; they will have to present their case. The tax inspector would not even get this through his own board if he did not give any details. The account could be anywhere but the evidence the inspector puts forward to the appeal commissioners will need some substance to it, otherwise we will not——
When the determination is served by the appeal commissioners to look at the accounts for ten years, would it be served on an organisation as big as AIB headquarters, for example, or on a branch because it seems that two different powers are being conferred here? One power is an enormous trawl over an entire group while the other caters for specific targets. I am not clear what power the Minister is conferring in respect of the trawling that can be done.
Based on the case presented by the inspector to the appeal commissioners, the latter must be satisfied that there is a case to be answered. The power would have to be broad because the inspector would not have the exact details of the person's account, so it may be up to the AIB to provide the information, but that is not a major compliance requirement.
Deputy Rabbitte pointed out — the Minister also made the point — that the Minsiter is trying to catch the larger tax evades. I have no sympathy with them, but the Minister is giving a power which could prove to be extremely difficult to enforce in practical terms. I do not know how many accounts people hold, but going by the Minister's number of 15 million — most households only have one account, so God only knows where the others are — it seems to me that he is defining something which will put a major compliance exercise on the financial institutions, if it can be as unspecific as targeting the head office and saying that they want to know all about the accounts in their remit.
Does this also apply to branches in Northern Ireland and the UK?
It only cover accounts within the State. If an inspector believes that a person has an account in the AIB and he wishes to gain access to it, he will have to give some evidence of this to the appeal commissioners and presumably, they will give all the facts they can so they can do the trawl. We are only referring to substantial cases, which would, in the view of the Revenue and appeal commissioners, be worth tracking down.
I welcome some of the changes the Minister intends to make on Report Stage, which will fine tune and improve section 13. However, I would like to spotlight the workings of the appeal commissioners because we did not glean much information on them last week. The basis of whether the certificate is worthless or gives one absolute immunity and the question of access to bank accounts is now being switched to the appeal commissioners. This is a fundmental change and signifies, from what the Minister said, that the Revenue Commissioners, the Department and the Minister for Finance are fed up with the courts. The Government has a hidden agenda in relation to taking the Circuit and High Courts out of this process because they are clearly out of touch with the Dáil and the Seanad in relation to tax evasion. The Government wants to change the goalposts to the extent that it wants to pick its own judge and jury, namely the appeal commissioners.
We are conferring important powers on the appeal commissioners, last week I asked for statistics to indicate what proportion of cases had gone to them on behalf of the taxpayer or the Revenue Commissioners and I was told that there was no figures available. My firm understanding is that the appeal commissioners are perceived by many accountants to be the rubber stamp of the Revenue Commissioners and I would like some scrutiny in this regard. Considering these extra duties, does the Minister intend to appoint additional appeal commissioners? If so, will the Minister give an undertaking that future appointments in his tenure will not be Revenue Commissioner personnel or does he think that the appointing of Revenue personnel as appeal commissioners is appropriate? Does the Minister think that appointments should be equally divided between the Revenue Commissioners and the accountancy or legal professions, for example?
If one is dissatisfied with any of our courts, there is a system of appeal and a constitutional framework in place and while the Minister may not be happy with it, it has served us well. I do not know if a track record of the appeal commissioners exist, but the perception is that, if former Revenue staff are appointed as appeal commissioners, one of their own is deciding and achieving through the back door something they could not achieve through the courts. I have put this forward because we should know exactly what we are dealing with in this debate. Meetings of the appeal commissioners are held in private, unlike court hearings, which are held in public. We have a cabal——
Tax cases in the Supreme Court have been held in camera since 1985.
Is there any public record of the appeal commissioners' work? Are we setting up a kangaroo court to deal with tax affairs? I do not wish to make allegations about the appeal commissioners, but we should look at this matter with our eyes open and know what fundamental changes are being made. I will refer to the other points in a moment.
The appeal commissioners have been in place since the foundation of the State and are there for the protection of the taxpayers — that is their role. Their cases are held in camera and the two current members are chartered accountants from outside the Revenue Commissioners, both they and their predecessors are held in high esteem. The cases, by and large, have always broken down to around 50/50. In 20 years I have not met an accountant who did not prefer to go in front of the appeal commissioners rather than somewhere else and that still applies. Despite the strong legislation, it has not been possible to get many of these cases heard in the courts. The appeal commissioners will equally be thoroughly dealt with. We are talking about big cases that have been rigorously examined and one of the benefits of the machinery of the appeal commissioners — I do not know if it is still the case — was that a compromise was reached in a high percentage of cases, which is a good mechanism for all parties and usually one the taxpayers are glad to achieve.
May I ask the Minister about the appeals process, since Deputy Yates has again raised the matter? Where, as a result of a disputed determination, the appeal commissioners choose, under section 13, to give the determination, I presume that the parties involved have a right to access to the courts in the ordinary way, if they believe there is an issue that is still in doubt?
They can proceed on a point of law to the High Court.
They could seek an injunction against the determination and then proceed to urge the case.
They would appeal on a point of law to the High Court.
On a point of law, is that the only basis of an appeal?
As Deputy Cox knows, although it is not for me to say, it is difficult to make a point of law.
Regarding transparency, to whom do the appeal commissioners report? Is there a record of cases?
The appeal commissioners are an independent body.
So is the Office of the Comptroller and Auditor General and it produces an annual report.
I presume the figures are open to inspection.
Does anyone look at the figures?
I refer to Deputy Cox's point, where a taxpayer, company or financial institution is unhappy and appeals on a point of law to the High Court, the appeal commissioners must make a statement relating the case. This statement is then presented to the High Court. The appeal commissioners must report to the High Court. They do not hold money. Money obtained from a settlement is given to the Revenue Commissioners and is looked at by the Comptroller and Auditor General.
Do they have a book of case law? Do they establish precedents?
No.
They make it up as they go along.
They follow cases resolved through the courts. They follow precedents set by High Court cases over the years.
Although the deadline for amendments on Report Stage has passed, given the fact that we are conferring more powers on the appeal commissioners and the necessity to maintain privacy, perhaps it would be possible to produce an annual report of their stewardship in terms of the number of cases, appeals, money involved, etc. It might be an issue which this committee could consider in the future.
I will consider that.
One appointment, if not two appointments, were made in the past few months. Are these appointments for a fixed term?
Two people have retired, or two people are retiring. These appointments are not for a fixed term.
The independence of the inspectors is being challenged.
I was taken aback when the Minister, in this Second Stage concluding statement in the Dáil, referred to 15 million accounts. I have stated that the licensed banks hold 5.2 million deposit accounts. What information does the Minister have in relation to the number of building society accounts? Where did the Minister get the figure of 15 million?
I received this figure from the Central Bank relating to the total number of accounts held in the State.
Does the Minister have a breakdown of this figure?
No. At one stage the figure was estimated at ten to 20 million. during the currency crisis, I tried to establish the correct figure. I was told that there were approximately 15 million deposit accounts.
Does the figure include credit union accounts?
It would include all institutions over which the Central Bank has a regulatory function.
Does it include foreign banks?
Yes, it would include foreign banks. Deputy Cox asked a question about a definition of banks and we must ensure that definitions are wide enough. In the time available, I was unable to obtain a wider definition. However, we will examine this matter and, if necessary, we will introduce a new definition in the next Finance Bill. The Deputy is focusing on insurance companies, but we will consider this and, if necessary, table an amendment to the Finance Bill.
In relation to the UK's Taxes Management Act, 1970, I accept the Minister's point about section 20. If a bank customer has a deposit account in the UK, Northern Ireland or in the Republic of Ireland, after this legislation is enacted, will it be more difficult for a tax authority to gain access to an account in this country? If it is more difficult to gain access in one jurisdiction, then how difficult is it?
It is more liberal in this country. Self-assessment, which allows certain freedoms, does not exist in the UK. A significant power which they have is access to unnamed bank accounts. Under no circumstances do we have access to unnamed bank accounts.
Does that mean a tax evader can open an account in a bogus name? What is an unnamed bank account?
Inspectors can look for the details of all the bank accounts at a branch. They may arrive at the AIB Bank in Ballyhaunis, County Mayo, and demand access to all data. However, they must have the power of the special commissioner, our appeal commissioner, under the old Acts dating from the foundation of the State.
In the interests of accuracy, it is important that amendment No. 79 is passed to facilitate the work of accountants tracing this Act in the future. I am sure this has the support of my colleagues in Fine Gael and the Progressive Democrats.
I have communicated with Deputy Rabbitte with regard to this Act.
I believe the chairman has broken new ground. I have received a number of letters from the Ceann Comhairle, but I have never received one ruling out an amendment on the basis that it is derisory.
I have three technical amendments on Report Stage. I propose to put down a drafting amendment to section 7 (4). I have received representations seeking a reduction in the 30 days' time limit within which Revenue must notify the relevant financial institution of the appeal commissioners determination requiring disclosure of taxable accounts. The proposal is that the 30 days be reduced to 21 days. This is to bring it into line with the section relevant to banking. Deputy Yates had raised that point. I will also put down an amendment to subsection (1) of section 9. The amendment will correct a minor drafting point.
This Bill is a record for me because in my 16 years as a legislator this is the first time every amendment and every section of a Bill was discussed.
Well, we did not quite do that, did we?
Practically.
It is now 1 o'clock and I am required to put the following question in accordance with the order of the Dáil on 1 July:
"That each of the sections up to and including section 15 which is not disposed of is hereby agreed to and that the Schedule and Title are hereby agreed to".
Question put.
The Select Committee divided: Tá, 18; Níl, 11.
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Tá |
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Mr. B. Ahern. |
Mr. M. Kitt. |
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Mr. M. Ahern. |
Mr. J. Ellis. |
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Mr. D. Foley. |
Mr. M. Ferris. |
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Mr. T. Broughan. |
Mr. C. Hilliard. |
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Mr. B. Kenneally. |
Mr. J. O'Leary. |
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Mr. S. Kenny. |
Mr. W. Penrose. |
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Mr. E. O'Keeffe. |
Mr. D. Wallace. |
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Mr. T. Killeen. |
Mr. B. Fitzgerald. |
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Mr. B. O'Keeffe. |
Mr. E. Walsh. |
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Níl |
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Mr. A. Boylan. |
Mr. J. Deenihan. |
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Mr. P. Connaughton. |
Ms. H. Keogh. |
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Mr. P. Cox. |
Mr. P. McGrath. |
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Mr. A. Currie. |
Mr. B. Durkan. |
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Mr. P. Rabbitte. |
Mr. I. Yates. |
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Mr. J. Browne. (Carlow-Kilkenny) |
Question declared carried.
Bill, as amended, reported to the Dáil.
The Select Committee adjourned at 1.10 p.m.