I remind the House that as well as being subject to six minutes overall, supplementary questions and the answers are limited to one minute.
Tuesday, 23 March 2004
Questions (8, 9)
Oral answers (14 contributions)
Breeda Moynihan-Cronin
Question:8 Ms B. Moynihan-Cronin asked the Minister for Finance the progress made to date by the offshore assets group of the Revenue Commissioners in its investigations into the use, for the purposes of tax evasion, of offshore bank accounts and trusts by Irish residents; the total amount of such funds identified so far; the total amount of tax collected in respect of these accounts; and if he will make a statement on the matter. [8935/04]
View answer
Michael D. Higgins
Question:19 Mr. M. Higgins asked the Minister for Finance the response received to date by the Revenue Commissioners to the letters sent by ten top banks to 120,000 customers warning them that they had five weeks to regularise their tax affairs; the number of responses received; the amount collected to date; and if he will make a statement on the matter. [8926/04]
View answer
I propose to take Questions Nos. 8 and 19 together.
I am informed by the Revenue Commissioners that substantial progress is being made in this inquiry. Arising from an earlier part of the inquiry, 254 individuals with trust operations in a particular offshore institution came forward, made voluntary disclosures and, to date, have paid €105 million. Subsequently, 1,300 individuals with accounts in another offshore institution came forward, made voluntary disclosures and paid €45 million to date.
Following these disclosures, in December 2003 the chairman of the Revenue Commissioners met with the chief executive officers of the ten main Irish financial institutions which have offshore subsidiaries or branches and they agreed to co-operate with Revenue in a major initiative to tackle tax evasion by Irish residents using offshore accounts and structures.
These financial institutions wrote to their customers in mid-February advising them of the Revenue investigation and of the voluntary disclosure regime operated by Revenue. This allows people to make a voluntary disclosure up to 29 March 2004 and they must then pay the tax, interest and penalties involved by 28 May 2004.
I am advised by Revenue that it understands from the financial institutions that up to 120,000 letters may have issued. However, some individuals would have received more than one letter because they had accounts in different banks or in different branches of the same bank. A substantial number of individuals have made contact with Revenue both through its offshore assets group and directly to Revenue district offices regarding the voluntary disclosure scheme. It is not possible, therefore, to say how many individuals are involved, nor is it possible at this stage to give figures on the numbers of voluntary disclosures that will result from this initiative. Previous experience indicates that the majority of disclosures will be received close to the deadline of 29 March and that most payments will not be received until near the payment deadline of 28 May 2004.
The general publicity surrounding these inquiries to date has also prompted other individuals to come forward and make unprompted voluntary disclosures bringing the total amount paid to date to in excess of €180 million.
Is the Minister disappointed or embarrassed by the number of prominent Fianna Fáil figures including Mr. Burke, Mr. Lawlor, Deputy Collins, former Minister and Commissioner, Padraig Flynn, his daughter, Deputy Cooper-Flynn, and most recently at the weekend, the former Senator O'Callaghan, who have serious questions to answer in regard to offshore accounts and difficulties with the taxman? Does the Minister anticipate that many more members of Fianna Fáil will have to come forward in regard to these matters?
The Minister referred earlier to saving money on the tribunals. If Fianna Fáil was to address these issues——
I have to remind the Deputy about the one minute time limit on supplementaries.
——as a party, would it effect serious savings? Was there a culture of tax avoidance within Fianna Fáil in that so many prominent members appear subsequently to have had difficulties in that regard? Could the Minister comment on that?
It is the duty of everybody to keep their tax affairs in order and to abide by the law of the land, particularly as it relates to taxation. That has been my position as Minister for Finance. Everybody has to abide by the law, irrespective of their political allegiance. I have no idea as to the numbers of people who will avail of voluntary disclosure or make any other tax payment to the Revenue in terms of the party to which they belong.
Does the Minister have any words for the banks because many of those receiving the letters are understandably in distress and claim, with some justification, that the banks led them into these schemes? Is the Minister aware whether any banking companies propose to make arrangements to assist their current and former clients in addressing their liabilities and responsibilities with the Revenue Commissioners? Many of those involved are probably in their latter years. Would the Minister expect the banks, as good corporate citizens, to show some consideration for actions on their part which may have led their clients to evading taxes?
It is a matter for the individual to keep his or her tax affairs in order and to abide by the law.
Does the Minister have sympathy for small account holders who opened accounts across the Border, only a mile or two from home, simply for shopping or other purposes over the years? These accounts were opened in the 1970s and 1980s before the break with sterling. These people do not know what to do or where to go. They cannot afford to go to accountants because that would cost more than is in the accounts altogether but they have to make returns before the end of this month. Can the Minister offer any leniency towards a person who is 87 years of age and now holds two very small accounts and must deal with that? Like Deputy Burton, I wish to hear what the Minister has to say about the many who were advised by banks to avail of those accounts.
It is not illegal to have an offshore account and many businesses require such accounts to conduct their businesses. Many individuals hold accounts in Northern Ireland, particularly for shopping trips, making payments in sterling or receiving UK pensions or education grants. This is not an offence, but the difficulty is whether those funds have been taxed or are taxable. Anybody here may hold an account in Northern Ireland or the UK. The question arises as to whether the funds in those accounts were legitimately taxed here and if they earned money abroad whether tax was paid on that here? Tens of thousands of people have legitimate accounts in Northern Ireland for spending purposes, making sterling payments and going on holiday in sterling areas. The banks may have written——
What about payment of pensions?
Some people were paid their pensions in sterling and kept an account in Northern Ireland or the UK in sterling not to lose on the conversion to the Irish pound or the euro. There is nothing wrong with that provided that the income in that account and the interest, if it earned any, was legitimately taxed. Many thousands of people apart from businesses have legitimate accounts of that kind and that is not a problem. The banks as part of this exercise have probably written to all their customers but that does not mean that those people have a tax liability. The question simply is was the money in those accounts taxed at source and, if the account earned money, was that taxed? I hope that clarifies the issue for the people to whom Deputy Crawford referred.
The greatest number of defaulters on the list of those who settled with the Revenue Commissioners came from Cork city and county. Have the Revenue Commissioners informed the Department whether there is a geographical reason the highest proportion came from that area? Does the Minister intend initiating an investigation as to why that seems to be the case as it includes a former Member of the other House and a serving county councillor for Fianna Fáil?
There is no particular reason one county should have more tax settlements than another apart from the number of citizens in that county. In the past year many of the settlements with the Revenue Commissioners were for bogus non-resident accounts. Many of those were held in the area between the northern and southern seaboards. The figures given by the investigation of the Committee of Public Accounts showed that many accounts were held in that area. Consequently, settlements are now being reached and this would have a disproportionate effect in some counties. That is my interpretation of the figures. I have no more information beyond what is written in the newspapers in that regard.
The tranche which the Revenue Commissioners, in conjunction with the financial institutions, are investigating arises from a power which I gave the Revenue Commissioners in the Finance Bill. The ten financial institutions had agreed to co-operate with the Revenue Commissioners but I copperfastened the legislative base in a section of the Finance Bill. Therefore, the financial institutions have written to their customers, to many of whom Deputy Crawford referred, who will not have a tax liability because their accounts are legitimate. There will, however, be many people who will have large settlements to make with Revenue as a result of this clause. I have no idea how much that will raise. We will know in the next two years.