Deputy Michael Finucane was in possession and has six minutes remaining.
Waiver of Certain Tax, Interest and Penalties Bill, 1993: Second Stage (Resumed).
The following motion was moved by the Minister for Finance, Deputy B. Ahern, on Wednesday, 23 June 1993:
That the Bill be now read a Second Time.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann, believing—
(a) that the proposed tax amnesty is an affront to tax compliant citizens,
(b) that it rewards those who have broken tax laws and exchange control regulations and will encourage further tax cheating,
(c) that it is particularly unacceptable that those who benefited from the 1988 amnesty and who have since again reneged on their tax obligations to the community will again be allowed to evade penalties and interest,
(d) that the guarantees of anonymity offered to tax offenders will facilitate further evasion and will inhibit the investigation of the source of moneys which may,inter alia, have originated from serious criminal activities,
declines to give a second reading to the Bill."
—(Deputy Rabbitte.)
Before we adjourned I was speaking of my concern about an implication in this Bill in relation to the appeals officer and the right of the Revenue Commissioners to have access to bank accounts. I pointed out that in this country there is reputed to be 15 million bank accounts. The main objective of the tax amnesty is to ensure that not alone are tax affairs put in order in Ireland but also that tax affairs in regard to money invested abroad, for whatever selfish reasons or motives of the original investors are also put in order. From what we read in relation to property scams, etc., and much media speculation that this money has been hived off in foreign bank accounts, I am sure the objective is to ensure that some of that money returns to this country. I wonder whether this specific measure could have a counter-productive effect? Could it stimulate people who may have accounts in banks or building societies in this country, by virtue of the fact that the Revenue may have access to their accounts, to move them abroad? I am concerned that this may defeat the objective of the amnesty.
I pointed out earlier that on previous occasions many speakers welcomed the amnesty on the basis that it would return money to this country and also that it would result in the creation of jobs. I take a different point of view because it is clear in the budgetary arithmetic of the Minister for Finance for this year that already there are dark, ominous clouds looming in regard to next year's budget and how it can be sustained. The Government have to look at all the pending extra expenditure — for example, the Aer Lingus equity, the overrun on social welfare, the increased public account expenditure — all of which will come into play later this year. The eventual target for the finalisation of the amnesty is 14 January 1994.
In relation to his budgetary arithmetic, the Minister is hoping to exceed the £500 million which the former Minister for Finance, Mr. Ray MacSharry, achieved in 1988. It is obvious to everybody that another objective is to try to placate the unions, because it appears that the Minister and, indeed, the Government do not have a healthy relationship with them. This is understandable because it is not so long ago since the 1 per cent income levy — a punitive instrument — was introduced. This 1 per cent levy was imposed on the harassed PAYE person. These people will look with absolute cynicism on the anticipated achievements of the proposed amnesty, a measure that is being made available to people who cheated the State out of millions of pounds and invested the money abroad. That should be contrasted with PAYE earners who are taxed at source and cannot evade the tax system even if they wanted to. People in the PAYE sector will be disillusioned by the fact that this amnesty is being provided for the "fat cats" in our society, selfish people who invested money abroad and deprived this country of much needed finance which could have been used in many ways. Now they are being compensated for doing that. In the case of the 1988 tax amnesty, people had to pay all their due taxes and only penalties and interests were waived. If the Minister is trying to attract this money back into the country, why is it necessary to apply a 15 per cent interest rate? This measure imposes no penalty on those people for what they have done to our economy down through the years.
The Minister is using a blunt instrument and in the process he is damaging the credibility of compliant taxpayers. This is an immoral and unsustainable measure. It flies in the face of logic. In my view the Government introduced this measure in the hope of placating organisations such as the trade unions and of abolishing the 1 per cent income levy later this year. That is its objective in regard to the tax amnesty.
The Minister is not adopting a positive approach to this matter and I am concerned about the secrecy which cloaks such dealings. If those defaulters are allowed pay only 15 per cent interest their identity should be made known in the same way as the names of taxpayers with tax liability arrears in excess of £10,000 are published. There is no justice attached to this tax amnesty. It is immoral and unfair to people who abide by our taxation code.
I listened with interest to Deputy Finucane's contribution and, while it was well researched and thought out, he ignored the reality of the world in which we live. He made an idealistic contribution.
The Deputy missed the first 15 minutes of it.
There are other means by which one can listen to the contributions of this House besides being present in the Chamber.
Deputy Kemmy was probably somewhere else worrying about the Shannon stop-over.
Deputy Kemmy, without interruption, please.
Deputy Finucane's contribution was similar to "the mint with the hole". It lacked realistic content, he posited a world of make believe, one that exists only in the Deputy's mind. Like Deputy Finucane, I would like it if everybody was perfect and paid their taxes — the wealthy, the not so wealthy and the poor people. However, the world does not operate in that manner. As Deputy Finucane was a PAYE earner for some time, he should be well aware that 90 per cent of our tax is paid by PAYE earners. The remaining 10 per cent is paid by professional people, farmers and the self-employed. The structure is totally lopsided and unfair to the ordinary worker. I would like to see everybody paying their lawful taxes and behaving themselves, but that would be a make-believe world, not reality. That type of world exists only in the minds of people such as Deputy Finucane.
This is the second time an amnesty measure was introduced. Deputy Kemmy should recall what the former Deputy, Barry Desmond, stated in 1988.
We must deal with the realities of life as we find them and not as we would like them to be. We must deal with facts, not with make-believe. The proposed amnesty is an attempt to deal with the reality and to confront the position as it is and not as we would like it to be. I am well aware of the limitations of the proposed tax amnesty, probably more so than most Deputies. Nevertheless, that does not blind me to what could be beneficial to our economy and our taxpayers if this amnesty is successful. This measure is the lesser of three evils. It is not, as Deputy Finucane claimed, an effort to placate the trade unions. It has nothing to do with the trade union movement or another wage agreement. If Deputy Finucane could cast his sights further afield he would discover that tax amnesties are not unique to Ireland. They are a well known economic device throughout the world. Germany and France, who are much wealthier than Ireland, have had to introduce tax amnesties at various times to confront the reality of money earned in those countries being invested in offshore islands and countries such as Switzerland.
For many reasons which I do not understand the proposed tax amnesty has got a very bad press. The media has dealt with this tax amnesty with great relish and energy, but even the press is not above reproach. It is not infallible and on this occasion it posited also an idealistic world of make-believe in respect of the proposed tax amnesty. It deals with it in a black and white manner, avoiding the grey areas. For reasons best known to itself, it portrayed the tax amnesty as an immoral measure.
Many abusive words have been used in regard to the tax amnesty. We could all adopt the attitude of Deputy Finucane and abuse tax offenders. He used words such as "fat cats", but tax defaulters are not all "fat cats" or super-rich. On the contrary, it is my understanding that many of them are professional people, farmers' business people and the self-employed. It is easy to select phrases and labels and cast abuse which may make newspaper headlines but that does not deal with reality. The words "tax cheats" were used also in regard to such people, as if Members of this House would not cheat the tax system if they could get away with it. Tax defaulters are not made up of one group of people, tax defaulting is endemic in our society and being abusive in this regard will do nothing to assist our economy or PAYE earners.
We must face reality and do everything possible to attract back moneys which are illegally invested abroad. We must also do everything possible to deal with people who are not paying their fair share of taxes here. We must discover how the tax net was so easily evaded in the first place, seal the loophole and then try to attract the money back into our economy. When we get that money back we should attract the people who own that money into our tax net and make them pay their fair share of taxes. This measure is not a foolish one. It is a practical measure which will face up to the reality that many people, for reasons that are immoral have taken money out of our economy and invested it abroad. Once they are in the tax net we can ensure that they pay their fair share of taxes in the future. That is the whole purpose of the amnesty, which also recognises the fundamental inequalities in the taxation system. It is an attempt to bring mechanisms into play that will stop people evading and avoiding tax in the future.
If we ignore the problem of the so-called "hot" money, we are shying away from the real world, the world of people, the world of tax evaders. However, if the money is brought back we can use it to good effect. I do not know how much money will be realised if the tax amnesty is successful, but whatever it is it will be money that we did not have before. The fundamental flaw in the arguments put forward by the opponents of the tax amnesty is that they cannot suggest what should be put in its place. There is a pregnant pause if they are asked that question on radio, on television or in this House. What we are seeing is pure opportunism. They are using this opportunity to paper over the cracks in their own structure which are caused by lack of discipline and lack of leadership in their own party. They are adopting the old tactic whereby if one's case is weak one tackles one's opponent. All we have heard here is sound and fury but nothing positive or useful.
All parties in this House, with the exception of the Democratic Left, have their own proposals in regard to the tax amnesty. Because this proposal has come from this Government it suits the opponents, Fine Gael and the Progressive Democrats, to attack it and throw enough dirt at it in the hope that some of it will stick. However, the bottom line is that if asked what they would put in its place they have nothing whatsoever to offer. That points to the bankruptcy and transparency of their arguments. I do not like people who avail of taxation and, having done that, do nothing for people who live in the here and now. If this amnesty is successful, taxation should increase and more money should become available in the short term to alleviate the desperate situation we are in in regard to finding equity for Aer Lingus.
Every week, in response to pressure from the parents and friends of the mentally handicapped, motions are put down here asking for £16.5 million. If the money were available I would be the first person to advocate spending it. Similarly £42 million is needed to fully implement the Child Care Act, and opponents of the tax amnesty are calling for its implementation in full. I support them also. However, they do not say where the £42 million will come from. There is an obligation to be responsible in Opposition also. That £42 million is not there but if money is brought back into the economy through the tax amnesty it is possible that the money could be used for such purposes.
Three weeks ago physically handicapped people demonstrated outside the Dáil, having come to see me as chairman of my party, and they made a very good case for more spending on physically handicapped in our society. Again, the money is not there right now. Indeed, the Minister for Health, Deputy Howlin, is besieged by lobbies every week seeking more money. They are entitled to make their case in a democratic society. However, the Opposition are leading many of these delegations but they are bankrupt of ideas about where the money is to come from. The time has come for more responsible Opposition. We do not need people hoping to make the headlines with catch cries and slogans. Any persceptive critic of this debate will see that what is being put forward by the Opposition is a smokescreen, a bogus, spurious approach, a monument to bogus punditry with nothing real to offer.
Tax evasion is endemic in our society. It is not the preogative of the super-rich but goes right through society. The proposed tax amnesty is an attempt to face up to that in an honest and realistic way. It admits that our tax system is lopsided and unfair and, above all, full of loopholes through which money can be easily spirited out of the country. What is needed is to bring it back into our society and use it for constructive purposes, such as alleviating the sorry plight of Aer Lingus, the suffering of handicapped people and coping with the results of child abuse. I would be against the idea of letting that money slip into the maws of the Department of Finance.
The next step will be to extend that amnesty into other areas of our society, for instance, the black economy, social welfare and other areas of life. We live in an imperfect society. It is difficult to achieve 100 per cent success in anything. Since I came to this House 12 years ago I have seen a lot of legislation pass through. Much of it was well intentioned and aspirational but it is never applied 100 per cent. We will never achieve 100 per cent success. We will never have a taxation system that will bring in a 100 per cent tax yield. If that were the case, it would be a wonderful country to live in, truly a country of saints and scholars. However, we live in a country which is like every other country, where there are good people and not so good people, where people are doing their best to survive and where there are crooks and gangsters. It is said that sometimes people whose voices are not heard have little virtue. That is true in this respect as well.
I hope when this amnesty goes through this House it will be implemented rigorously and fairly by the tax authorities and that in the future we will see a decreasing amount of tax evasion. I hope the penalties will be implemented by the Department of Justice in the future. If people evade their taxes they must take their punishment like everybody else and, if necessary, go to prison. It has been said that if the famous jockey, Lester Piggott, had been living here, he would, instead of going to prison have got a nomination for the Seanad. That day is gone. The people who evade their taxes, be they influential, powerful or ordinary, will pay the price. We will show, by example, that we intend to make these laws stick so that tax evasion will be scaled down and all people will pay their taxes.
This proposed amnesty will be a water-shed in the taxation code of this country. It would be unrealistic to say that tax evasion will be a thing of the past. However, it will be scaled down; everybody will pay his or her fair share and this will be a better place to live in and where we can tackle some of the problems that have long bedevilled our country. I hope this debate will take on a more mature ring so that we can have a general debate. If the proposed amnesty can be improved on Committee Stage that is all to the good. We have an obligation to run this country and find enough money to meet the increasing demands. This amnesty is a mechanism to bring more money into our economy to tackle the things I have outlined.
I wish to share my time with Deputy Connaughton.
Is that agreed? Agreed.
I welcome the opportunity to make a brief contribution to this very important debate which affects every person in this country. What affects everyone is the attitude of this Government towards people who are honest, upright and diligent in their affairs. The impression is going abroad that this country is full of racketeers, full of people who are trying to circumvent the system of justice. Nothing could be further from the truth. There are so many decent, hardworking people, with families, who are diligent about their tax affairs and want to keep them up to date. I know many publicans who check their takings nightly and leave aside the amount of money due for VAT to send it away. They are diligent about this because they realise that if they fall behind they will be in trouble.
Other people involved in big business and who have contacts believe they can circumvent the tax system, but they represent a small number. Some people would question how others who can afford a good lifestyle are being granted an amnesty. The people who would ask about those people's lifestyles are diligent in paying their bills and their taxes. I am sure there are many annoyed spouses wondering how a neighbour can afford a good lifestyle, the big car, the yacht in the bay and two holidays while they cannot. The simple answer is that he or she was not paying taxes and the Government now suggest to give them special consideration. Those people represent a small number in any society. I may be pointing the finger wrongly at some people — they may have won the lottery and told nobody about it. The Government has said that if those people come back within the net, they will let them off with paying 15 per cent tax. For the past ten to 20 years those people may have paid some tax but they were not meeting their full tax commitment and that is fundamentally wrong.
This Government is becoming more like a soap opera. Big business, money under the table and a smart Dallas lifestyle is being promoted. We know how soap operas end. Everyone is a loser. This Government and country will be losers because of the attitude and image portrayed in this House in recent legislation. Such legislation does not reflect the views of the people. We are heading in the wrong direction and it is time to stop. If people default on paying their taxes penalties should be applied not an amnesty.
The most amazing aspect of this Bill relates to the chief special collector. His role reminds me of that of a confessor in the confessional. He has a vow of secrecy. He hears all the big sins but is not allowed to tell anybody. He will give absolution and people will be let off with a burden lifted from their conscience. Those people will have cleaned their souls and will be able to face the world. That may be okay in the case of confessing sins in a confessional but it is not okay for the chief special collector to operate in that manner in taxable income. It is not fair that such people can get their affairs in order in the dark of the night, so to speak, and get away with a minimum tax commitment of 1 per cent per annum in respect of a 15 year period, or less if the period is longer.
The story circulated that this money is to create jobs is the greatest insult. The unemployed do not want this type of money pumped into job creation. I do not believe such money will provide for jobs. It is an insult to the 300,000 unemployed, the majority of whom are seeking work. I have listened to Government backbenchers say that the money collected will be allocated to provide roads in Cavan, Kerry, drainage works in other areas, establish industries and so on. Such money cannot possibly provide for all these proposed projects. What type of money is involved? Is it like the airy fairy £8.8 billion promised through the EC Structural Funds from Brussels?
Santa Claus.
It will come.
That money has now been reduced to £5 billion or perhaps less. Much time was wasted in regional committees calculating figures on the assumption that they would be allocated a slice of EC Structural Funds of £8.8 billion. Is this money to be collected to prop up the £8.8 billion? Is the Government so desperate that it is prepared to reach into any cesspool to get money? That is not what the people want and it is wrong. How can we be sure that this money is all in off-shore accounts? How do we know it is not buried in accounts in this country? If that is the case, what will be the benefit of this amnesty? Some people have enjoyed the lifestyle I have described and they will declare their income in the confessonal in the dark of the night and get away with paying 15 per cent. I can see by the smile on the Minister's face that he is beginning to realise this is wrong. I am glad I took the opportunity to say these few words. The Minister could have a change of heart yet and this matter can be further teased out on Committee Stage.
The proposed amnesty is outrageous and any argument in regard to it does not stand up. Deputy Kemmy's contribution which condoned this amnesty was a real turnabout. Deputy Kemmy represents PAYE workers, as do all Deputies. Those workers must pay their tax at source — money they never see. They have marched in this city and we will see them march again when they realise that there are people abusing the system. The Government claims there are a large number of people involved but I do not believe that is the case. The PAYE workers have been given the impression that the self-employed are ripping off the tax system but nothing could be further from the truth. Self-employed people are small business people, farmers and others. I have heard it said many times that farmers should be taxed as they have plenty of money. It is claimed that they have money buried in the North of Ireland and in some of the European banks. I would like to meet some of those wealthy farmers and shake their hand and, perhaps, some of their wealth might rub off on me. Farmers in my area do not have that wealth. Perhaps some farmers elsewhere have that type of wealth but all farmers should not be tarred with the same brush.
Small businesses find it hard to survive. Recently I met a small business proprietor who could just about afford to take his wife out for a quiet drink. That couple have four children. I could see the worry in his wife's face. The man was a little more jovial. His wife is the book-keeper in that small business and she knows the bills that must be met and how difficult it is to make ends meet. She is very diligent about keeping her tax affairs in order because she dreads not being able to meet her bills and the threat of the Revenue collector.
I wish to share my time with Deputy Connaughton. Perhaps Deputy Crawford may also wish to share time. There are a range of Deputies on this side who are anxious to debate this issue.
There is a witchhunt being carried out at present on those involved in small businesses, the shopkeepers, garage proprietors and farmers. It is perceived that there is a wealth in small business to which the Revenue is not getting access. There is no leeway for people involved in small business. If those people fall behind in their payments they receive an official letter, followed by a visit from the sheriff. I am not saying that city people are not diligent in their business affairs but they are not exposed to the same embarrassment as that suffered by a person involved in small business in a rural community who receives a visit from the sheriff. The Minister is from a rural area and he knows this to be the case. Such a visit can have a devastating effect. Rumour can spread that a person's business is not operating well because a sheriff was seen to visit that person. However the person may be keeping his business afloat and doing quite well. The Government should provide encouragement and assistance through various agencies for those involved in small businesses. If a business person carries out improvement works or adds an extension to his premises, he will receive a visit from a local councillor for a review of ratable valuation. The health inspector will verify that the extension contains all the necessary items that should be part of the development of a business, which I agree should be the case. Then the tax inspector will inquire whether the books are in order and where the funds came from to carry out the extension.
The IDA, for example, should make a grant available to erect such extension to introduce an element of competition. If the Minister adopts that attitude, he will find that the people will respond. I have no sympathy for those who are not paying their taxes, the people the Minister should be targeting. Why should a person pay his taxes while another does not because he may be a friend of the Government, or knows a Minister? That is wrong and it is not a proper attitude to adopt. While the Minister may collect some money through this tax amnesty, in five years time, or perhaps less, there will be a clamour for a further amnesty from the people who brag in our bars and lounges that they got away without paying their taxes. The problem will snowball and more people will become involved. The Minister is adopting the wrong approach to this issue. My party and I are opposed to this measure and I am glad to have the opportunity to say that in public.
I would prefer to have more than eight minutes to speak on this very important subject. I wish to refer to tax amnesties in general. They are a new feature of Irish life. The last amnesty was supposed to have been extremely successful and I understand the Government took in millions of pounds under it. Tax amnesties send a deplorable signal to the general public who grudgingly pay their fair share of tax because it is the law. That is the reason they pay their tax; it is not because they enjoy doing so. I do not enjoy paying my taxes and I am sure the Minister does not. However, we pay them because the law requires us to do so.
The Government is now sending a different signal, that under a certain set of circumstances a law will be introduced that will excuse them from paying their fair share of taxes. I agree with some of the sentiments expressed by Deputy Boylan. I have no doubt that some money will be collected from this amnesty but the harm it will do, particularly to young people who are paying tax for the first time, will be enormous. One can imagine the talk in the pubs among young people receiving their first pay cheque, the few of them who are working. They will say that the Government is introducing a system under which when times get tough they will not have to pay their fair share of taxes. That is the view of all people.
I have had great regard for Deputy Kemmy over the years but in his contribution on this national issue he made a U-turn. They were not the views he would have had over the years on the subject of tax amnesties.
Ireland, like other democracies, has a peculiar tax system in that we have a tax for everything. We have income tax, corporation tax, probate tax, capital acquisitions tax, employer and employee PRSI, VAT, car tax, water taxes, rates and so on. There is a very influential minority grouping here and, despite what Deputy Kemmy said, few of them draw the dole. They set out with the intention of not paying their tax. They are perceived by the general public as parasites, which they are.
They live off Irish society and make a good living doing so. The tragedy is that until recently they have remained untouched in their daily life. I have heard officials from the Revenue Commissioners, particularly members of the trade unions within the Revenue Commissioners, say that they now had the model to develop anti-tax evasion measures provided that a number of steps are taken. The Revenue units say they are understaffed, that certain measures need to be implemented to enable them carry out this task, but that they are in a position to tighten the screw on tax dodgers.
The Government, and many other govenments, seem to have decided that it is not worth the trouble, that the amount of money required would not provide a sufficient return. However, this year out of the blue the Minister decides we should try to collect those millions from abroad. This is the most cynical part of this exercise. Was much research carried out into this measure or was it a figment of someone's imagination?
I looked up the Fine Gael manifesto.
We lost that election.
Somebody felt that this was a good idea. However, no research has been carried out on how much money could be collected. This minority I mentioned may decide, for whatever reason, not to put their money into the Irish economy. What is so great about this new Ireland with Fianna Fáil and Labour in Government and 305,000 people out of work? Why does the Government believe that this money can be collected now? The Government has been sold a pup. It has discovered, since the rosy scheme was floated, it would not get wren money from abroad and decided that there might be a better chance to obtain money at home.
Some officials in the Department of Finance agree that not much money will be collected from abroad. Whether the money is in the system is another story but the signal the Government has given to the people of Ireland will not be forgotten for a long time. The more successful the amnesty the worse the signal will be. Business graduates will want to know whether it will be possible to avoid paying tax if they have Government backing.
As the Government has a majority in the House this legislation will be passed today. Opposition Members can but express their criticism of the measure. People will recall June 1993 in Dáil Éireann as the time when the Government gave a blessing to everyone to evade tax in every way possible. I hope that even at this late stage the lily whites in the Labour Party will see the error of their ways.
A Deputy
If they were here.
They are not here for this debate today. I am also surprised at Fianna Fáil——
That is unfair.
Those people should be here. However, I am glad to see the Deputy is here.
Will Deputy O'Keeffe bring back his money?
He has a lot of money.
Carlow-Kilkenny): The Deputy has exceeded his time and I ask him to conclude.
I seek permission to share my time with Deputy Ned O'Keeffe.
Acting Chairman
Is that agreed? Agreed.
I am happy to lend my support to the Bill. There has been a heated debate on this matter, much of it ill-informed. The Bill has received much criticism from the Opposition. I fundamentally disagree with some of this opposition. It smacks of political opportunism, basically it is opposition for the sake of opposing. It is ironic that most of this opposition has come from the Fine Gael side.
In 1989, when Fine Gael proposed an amnesty, it suggested that people be allowed pay back the money over a two year period at a rate of 12 per cent interest. I have heard Fine Gael Deputies ask how much money is out there. In 1989 Fine Gael said we would get £45 million from such an amnesty, but suddenly there is a loss of memory. However, that is not surprising because the very respectable Deputy Yates put down an amendment about which his leader knew nothing and subsequently the idea was scuppered. There is now total opposition to this amnesty. I am not certain that the people are convinced by the arguments put foward by Fine Gael.
The Government has a very ambitious programme which will benefit the Irish people and improve their quality of life. Considerable resources are required to implement that programme. There are many vital services which demand additional resources such as health, schools, services for the disabled, infrastructure and, of course, the regeneration of employment. In order to tackle these important objectives it is imperative that the Government considers all sources and avenues to raise revenue. One such avenue is the proposed amnesty which is being introduced in this Bill. If Fianna Fáil is serious about committing itself to the implementation of the Programme for Government, the tax amnesty must be seen as just one tool in bringing this about.
This is a responsible approach and is in direct contrast to the immature posturing of the Opposition on the issue. I particularly refer to a senior Opposition spokesman whose contribution was a model of bluster, was played to the Gallery and was full of cheap gibes, snide remarks and meaningless tripe. In the Deputy's eagerness to play to the Gallery we heard a whole range of cheap sound bytes. It was regrettable that a senior Opposition Member indulged himself in that way.
I remember the sceptical voices that were raised at the time of the last amnesty. People said it would not succeed and it would bring in only a paltry amount of money. How wrong they were. The Opposition was wrong then and it is wrong now.
At that time people had to pay the full taxes.
The Deputy missed my contribution about Fine Gael's role in this matter so——
I am listening with great interest.
——I suggest he remain silent. The Deputy made his contribution and he should have been here to listen to the story about Fine Gael.
This is a special offer.
The only difference with this amnesty is that the Opposition has clearly decided to exploit this situation so that they can indulge themselves in an orgy of righteous indignation.
The 1988 amnesty was a tremendous success. It was a credit to the then Minister for Finance, Ray MacSharry, and indeed to the man who proposed it at the parliamentary party meeting, Deputy Noel Davern. It provided much needed revenue to the Exchequer. Revenue is still needed for a variety of reasons and I congratulate the Minister on bringing forward the current legislation. I ask those who oppose the Bill: what use will this much needed money serve by remaining outside the country? How will it benefit the people of Ireland by languishing in foreign banks? Would these people like to see this money lost to the Exchequer or be actively put to work for the Irish people? Judging by their statements they would obviously prefer to stick their heads in the sand on this issue.
We have much to gain from this amnesty, as was proved by the success of its predecessor. There is much money out there and by means of the tax amnesty it can be drawn into the tax net and used in a productive manner. It is estimated that £3 billion could be gained as a result of the amnesty. Even if £1 billion was brought in, £150 million would go to the Exchequer. There is much concern among PAYE workes about the 1 per cent levy, and we are well aware that the PAYE sector is overburdened by tax demands, but that levy could be abolished as a result of the amnesty. Some of the money could be used, for example, as funding for the handicapped. I ask the Opposition: what is wrong with trying to ensure we get money back to this country to make it work for the people? That is what good government is about and that is what this Government is trying to achieve.
I would like to put one question to the Minister. For instance, if John Murphy earned £50,000 on nixers and declared only £30,000, how would Revenue determine the full extent of the money? If the same person decided to put his money in a bank in Jersey between now and 1 January — the date on which the money is lodged may not be apparent — how would that be established? If that person was to declare the money he would have to pay 48 per cent tax but by putting it in a bank in Jersey he could then bring it back at only 15 per cent tax. Will the Minister say how that problem will be overcome?
Those who wish to participate in the amnesty have until 1 January to regulate their affairs. The opportunity is there for them and if they do not grasp it they will face the full rigours of the law. It was interesting to hear Deputy Rabbitte say that fear will make people bring back the money. What is wrong with that? This is the last occasion on which this opportunity will be given to people to regularise their affairs.
Deputy Rabbitte said that the friends of Fianna Fáil would benefit from this amnesty. That was ironic coming from Deputy Rabbitte who seems to have a short memory having regard to his departed soldiers of destiny. Some would say that they might benefit more than others. However, many people will benefit from the measure.
I thank Deputy Batt O'Keeffe for sharing his time with me. I commend the Minister on his initiative and foresight in introducing this Bill. It is welcome legislation which does not deserve the churlish and ill-informed comments directed at it by members of the Opposition. The comments of Deputy Pat Cox were particularly hard to stomach. Does the Deputy not know that the natural constituents of the Progressive Democrats are those well-heeled individuals who will avail of the amnesty?
Deputy Michael McDowell has laboured the point that this Bill may be unconstitutional but he has failed to acknowledge, either in public or in private, that, being a money Bill it is constitutionally protected as it goes through the Dáil and Seanad.
Broadly speaking I welcome the Bill but with some reservations. I commend the Department on publishing this legislation within a relatively short time but tax legislation is becoming increasingly complex and it is almost inevitable that legislation drafted in such tight circumstances will have weaknesses or will create ambiguities. Section 2 (2) (b) (v) fundamentally excludes from the amnesty any tax due. It proposes that relevant tax shall not include any sum:
which was not paid on or before the designated date by virtue of an arrangement or scheme the main purpose, or one of the main purposes, of which was the avoidance of liability to tax,
As the House will appreciate, the avoidance of a liability to tax is defined in 1988 legislation. It would appear that where one has already disclosed to the Revenue that one is engaging in tax planning, he or she is precluded from the amnesty, whereas if one had opted for full evasion one would be included. There is little that can be done about that at the moment because it is incorporated in legislation.
I am concerned about the proposed confidentality attaching to disclosures for amnesty purposes. There are two types of amnesty — the 15 per cent amnesty and the amnesty on interest on penalties and other taxes. The 15 per cent amnesty and the amnesty on interest and penalties will be dealt with by a new officer, namely a chief special collector. The only undertaking on confidentiality and the pursuit of the taxpayer as a targeted taxpayer by the Revenue is in respect of the tax paid under the amnesty. If, say, a trader in Mallow with an up to now undisclosed deposit account of £1,000, discloses the account and pays 15 per cent on the interest, the only tax which he is guaranteed he will not be pursued is the tax waived on the deposit account. The business could still be audited and targeted by virtue of the fact that the trader availed of the amnesty in respect of the deposit account. The press release on the general amnesty says, in relation to this amnesty on interest and penalties in respect of the taxes, that provided there is a full declaration there will be no question of further pursuit. There is nothing in the legislation about this. In those circumstances people would not feel confident that they would not be pursued. The appropriate remedy in these circumstances is for the Minister to give an undertaking in the Dáil that the Revenue will not audit any accounting period ended before 5 April 1991. This would ensure that anybody who has disclosed details will not be targeted and it will not create a paradox as between those who availed of the amnesty and those who did not avail of it. The quid pro quo from the taxpayers on this issue could be that they will bring up to date their tax affairs as at 5 April 1991. One could owe a fortune in tax in 1992 and still avail of the amnesty in respect of 1991. It is this kind of taxpayer which could be used as a battering ram to knock the whole amnesty.
Section 11 almost drives my blood pressure through the roof. It says that anybody who:
(b) knowingly and wilfully aids, abets, assists, incites or induces another person——
(ii) unlawfully to avoid liability to tax by failing to disclose the full amount of his income from all sources.
shall be guilty of an offence that carries a term not exceeding eight years. That is draconian. It will inhibit tax advisers from advising on the amnesty, since they may have doubts in regard to the certainty of the application of this section to themselves and having regard to the matter of confidentiality in dealing with clients. The Minister should give some assurance that it is not intended to apply this section to technical and professional advisers, since tax legislation, of its nature, is very complex and people require advisers. In The Irish Times today it is said that even the advisers cannot fully understand the amnesty legislation. Section 9 provides for a new offence punishable with an eight year imprisonment where a person who should do so, has not availed of the amnesty. I hope the Minister will consider what I have said. If my suggestions are taken on board they will make a welcome Bill more effective.
I urge the Revenue Commissioners to look seriously at the way they do their business. Their inquisitorial and draconian approach is counter productive. It puts people off declaring their interests. There should be a more open and business like approach by the Revenue. It would be better for all concerned. We are all aware of the major problems that beset many business people especially in the private sector which is the productive sector. If we are not prepared to work with the productive sector we will have no business and no employment. If one approaches the Revenue Commissioners on behalf of a constituent one is met with a frosty reception although the problem involved may be only short-term. A more business like approach like that of the banks, for instance, would be better. The attitude of the Revenue Commissioners disturbs and annoys people. It adds to the problems this Bill seeks to address. Many people would have declared their interests long ago if it were not for the attitude of the Revenue.
I welcome this forward thinking, progressive Bill. We must recognise human weaknesses but hope that the legislation will result in money being brought back into the economy and invested productively, thereby allowing for more liquidity and, in turn, for more money being available to the banks to enable them reduce interest rates further.
I propose to share my time with Deputy Creed. I found the contributions of the most recent speakers very interesting. They displayed an honesty in terms of the kind of crime we are discussing. Of course, I mean that in the lightest possible way.
One of the most offensive parts of this Bill is the element that became public knowledge in the past week only — that on top of the amnesty for "hot" money invested abroad we are to have a repeat of the general amnesty which we had thought we had dealt with and financial benefits of which we thought we had received in 1988. That was meant to have been the amnesty to end all amnesties, that was going to get everybody's tax accounts in order, that would herald a new regime under which taxes would be paid. The penalties to be imposed were to be severe: anybody not complying from that date would be treated in the most severe manner. How are we expected now to listen to the same presentation by this Minister, suggesting that this time we are deadly serious, that this is the final amnesty. What does final mean? The 1987-1988 amnesty was to have been the final amnesty. Can our system of taxation, providing support for the State, have any credibility following such a decision?
The Minister did not deal with any of these issues. This is such a complex, technical Bill, as was mentioned by Government Deputies who have just spoken, that even financial experts are having grave difficulty coming to terms with its provisions — and they, like the rest of us, are not being given a great deal of time to mull over it. It has to be acknowledged that it is a complex Bill. The Minister avoided the broader issues here, although I have heard him endeavour to defend the Bill in the public media within the past 48 hours when the full scope of the proposals became public knowledge. To me such defence wears extremely thin. In regard to the hot money outside the country, while I entirely support the argument that it fundamentally undermines our tax system, it is a source of money difficult to estimate. It is a source of money we have not targeted to date and which has not been the subject of an amnesty. I suppose within the context of the range of proposals in this Bill, this proposal could be seen as less offensive than repeating an amnesty sold on the basis of that it was finally regularising our tax system, releasing our tax inspectors for the task of ensuring that henceforth tax would be paid promptly and that the heaviest penalties would be imposed on those who did not do so.
Many of us will have heard the kind of stories that make us feel embarrassed to be Irish. This approach to taxation — a second tax amnesty in six years, a tax amnesty for foreign money and now a social welfare amnesty — makes us appear as some sort of a banana republic, where the systems that support the State lack absolute credibility. I am thinking of stories like the one told this morning in the media in regard to the final report of the Telecom Éireann débâcle, when it was clear that the inspector had found that no criminal or other charges had been upheld against those being investigated. However the point was made that the tax inspectors might find a great deal in which to be interested and to pursue. But the interviewer went on to say: “Of course, that is now all covered by the tax amnesty”. How convenient.
Then there was the other story told — I think by a Member of this House — about a person who, paying their bill on foot of the last amnesty, sent a covering note to the officials saying: "Now, there you are. You have got it. That is the last you will be getting from me until the next amnesty". Indeed, the next amnesty has arrived, probably just in time for that and other individuals. I cannot understand how the Government cannot see that this grossly undermines our tax system, rendering it extremely difficult for any of the Government's utterances about their seriousness of intent in the future to be taken at all seriously.
The provisions of this Bill create two amnesties — the incentive amnesty for those with money abroad and the general amnesty with which we are all familiar and which, forgive me if I am sounding cynical, will obviously be a recurring feature of Government policy as long as the current influences prevail within the parties comprising the present partnership Government.
The third element is the social welfare amnesty, a more confused area since no Bill has been produced but rather a date set by which persons can set their affairs in order. I think the date is similar to that applicable in the case of financial and tax matters. However, the consequences for somebody declaring under the terms of the social welfare amnesty are even greater. It is my understanding that persons who have already made themselves known under the social welfare amnesty are being subjected to quite extraordinary rigours while those who have been reaping the benefit of substantial tax incomes which should have been paid over to the State are treated much less severely. I refer to the £500 million involved on the last occasion an amnesty was announced, the unquantifiable amounts that may result for the foreign hot money amnesty and the still undiscovered pre-1991 sources the Minister hopes to reach under the general amnesty. But the consequences for somebody declaring under the social welfare amnesty can be much more severe and it may mean loss of family income of between £20 and £30 per week over a substantial period in order to recoup sums either overpaid or underpaid for a period of time.
It is unfortunate that we have never had an opportunity, other than at Question Time or on discussion of Estimates, for anything other than the most superficial examination of that amnesty and how it is operating. I should like to see an opportunity being afforded for a proper debate on the amnesty in order to establish whether the estimated sums of money will be forthcoming. The Minister has not indicated how much he expects to come his way from that amnesty. The Minister has not indicated how individuals are to be treated, whereas in this Bill it is fairly clear and those involved have their financial advisers and accountants advising them. But an individual who may have, wittingly or unwittingly, received social welfare payments must take a substantial risk in regard to a payment that may be the major supportive element for them and their family. While fraud within the social welfare system is something we all oppose because it undermines the benefits of the system for those most in need, I should like to think that in pursuing persons under either amnesty there would be an even-handed approach and an understanding and sympathy for the human circumstances prevailing in the case of many social welfare recipients whose circumstances contrast enormously with those of many of the people who avoided substantial tax liabilities.
I shall conclude by expressing my concern about the general amnesty, which is an appalling additional provision in this already highly unacceptable Bill.
I thank Deputy Flaherty for allowing me to share her time on this debate, for which so little time has been provided by the Government. This is an extraordinarily complex Bill which has baffled not only those of us who labour in Opposition and who have none of the handlers, advisers or assistants available to Government Ministers. It is totally inappropriate that this Bill should be rammed through the House within such a short timescale. It is not being rushed through for any pressing financial reasons but for the sake of political convenience. The Government is only too well aware that there has been an adverse public reaction and the only way to combat this is to get it out of sight as quickly as possible. The Taoiseach heralded his arrival with the now tarnished phrase "open Government" and it is to his eternal shame that this significant legislation is being rammed through the House.
Many insincere comments have been made about Dáil reform. The committee system was established recently but this legislation will not be scrutinised in sufficient detail in one day by a committee. For this reason I have serious reservations about it. It will not be debated or teased out adequately in the time allowed.
The principle behind an amnesty is that it is a once-off measure. As we are aware, this principle has been breached time and again in recent years. This raises serious questions about the signal sent to the community at large, primarily the PAYE sector which has been carrying a heavy burden for years. The proposals before the House provide tax cheats with a way to have their liabilities waived in respect of taxes which should have been paid to the State. At least in relation to the 1988 amnesty a person had to meet his tax liabilities; only the penalties and fines were waived. In this instance the Government is adopting a grovelling attitude. It has no financial policy and is begging the tax cheats to give us their money and in return we will do a good deal. Compliant PAYE taxpayers are being kicked in the groin even though they have served the State well in difficult circumstances in recent years.
A signal is also being sent to the tax advisers and specialists who offer their services to the larger companies. Given the frequency with which amnesties are offered they will advise their clients not to meet their tax liabilities, that there might be another amnesty and they might be able to squeeze another drop out of the Government before they have to pay what is rightfully due to the State.
One of my principal objections to the Bill is that it opens up the possibility of money laundering. We will not have sufficient time either today or tomorrow to tease out this matter and to be able to say, if and when the Bill is passed, that money will not be laundered. The Government has a strange set of priorities given that it has failed to introduce legislation to implement the EC Directive dealing with money laundering which should have been implemented by 1 January this year. Without the safety net of that directive, which may not in itself be adequate, there is enormous potential for dealers in death, who have made their money out of drug trafficking and arms dealing, to launder their profits.
In my own area in Cork there is a small band of wealthy people who are well known to the Garda Síochána and the legal profession. They have made huge sums of money through these activities, particularly drug trafficking. Unfortunately, we have only been picking up the minnows and have failed to nail the main offenders. I am afraid that these people who have huge sums of money at their disposal, much of it stashed in foreign accounts, will be able to avail of this tax amnesty. For this reason alone we should reject the Bill which is illthought out and opens the door for such people.
Government backbenchers have been searching desperately for a justification. Many of them have come up with a range of pet projects and lame ducks in their constituencies which they feel will benefit from the proceeds raised by way of the amnesty. My Cork colleague, Deputy Batt O'Keeffe, mentioned that the services which the handicapped are entitled to could be paid for by the tax cheats. This was the lowest of the low and an insult to a forgotten sector of the population. Prior to the election the Labour Party made certain promises which were reiterated in the Programme for Government. These included a commitment to provide £30 million. We have been informed by backbench Deputies that £5 million has been provided and that the balance could be provided by the tax cheats. This begs the question as to where in the order of priorities services for the handicapped come.
A promise has been given to provide £175 million by way of equity to Aer Lingus. There is a danger that the yield from the tax amnesty will be used to defer unpalatable budgetary decisions which have to be made relating to public expenditure and public sector pay. This would be unacceptable.
The Minister for Finance has also sought to justify the amnesty by saying it is a once off, the amnesty of all amnesties, and if people do not avail of this amnesty they will be sent to jail once the deadline expires. There is a significant number of small businesses, including publicans, around the country are desperately trying to survive. The Minister for Finance is scraping the bottom of the barrel in threatening such persons, who do not have access to tax advisers and specialists whose services are available to the big winners, that the Revenue Commissioners will have new powers to hound and harass them and close down family businesses which are under pressure.
I am willing to share my time with Deputy Ó Cuív.
Acting Chairman
Is that agreed? Agreed.
We would be happy to hear the Deputies justify this measure at length.
I am delighted to have the opportunity to contribute to this debate. I find it difficult fully to support the legislation as there are some aspects about which I have reservations. This is a very controversial Bill. At the end of the day the implications of the legislation are vital in terms of the functioning and development of our democracy. If the law is not seen to be impartial in its administration, we cannot expect the public to view either the courts or the Oireachtas with respect. The legitimacy of our democratic institutions will be fundamentally undermined if the perception gains credence that corruption is acceptable in our society, is condoned in any way and not penalised.
The practice of holding "hot" money, that is, money which has evaded the tax system and has been invested either at home or abroad, is corrupt. It also debases our democracy as it denies the State the revenue which is essential to provide the services to which a civilised society governed by the rule of law is entitled. This practice cannot be condoned. An attempt has been made to justify this practice on the basis that tax rates were too high in the past. It should be pointed out that the PAYE sector had no choice about paying its tax, which was also high.
My concern is that this amnesty may give the public a wrong signal about the direction in which the Government is going, particularly having regard to the recent spate of scandals about the amount of public money spent to date on the beef tribunal. I fully accept that the intentions of both Deputy Davern and Deputy Kemmy are honourable and that they are guided by a wish to return to this jurisdiction as much as possible of the tax which has been illegally evaded. I also accept that it is the Government's objective to secure some measure of taxation rather than allow this money remain outside the country where it will make no contribution to the Exchequer. However, the Government's intentions and the public's perception of the motivation behind this legislation may be totally different.
I urge the Minister for Finance to consider placing advertisements in the newspapers to clarify, first, that the full amount has to be paid of all tax arrears other than moneys held outside the State; second, that companies will be excluded from the main amnesty; and, third, individuals who fail to disclose moneys held outside the country will be prosecuted and jailed for serious offences. He should also clarify that it is not intended to extend the new stringent penalties for so-called "hot money" to ordinary taxpayers, particularly small traders and the self-employed who may be late making their returns or behind in their tax payments due to identifiable trading problems. It would be a perverse form of justice if these people were criminalised by the introduction of an amnesty for people whose activities are not far from theft.
I was glad to see in a report published by the Auditor General last October that there is approximately £2.5 billion owed to the Exchequer in arrears of PRSI, income tax, etc. Obviously this is a huge amount of money. The Auditor General believed a large proportion of this money could be collected. I hope substantial inroads will be made in the collection of that money.
Acting Chairman
I am sorry to interrupt the Deputy, but I wish to inform him that he has 20 minutes. Deputy Ó Cuív will get in later.
Tax evasion is not dissimilar to theft. Anyone who acquires money which does not rightfully belong to them commits a crime. This legislation will correctly impose substantial penalties on these people in the future. I would like substantial penalties to have been imposed on these people in the past and substantial powers to have been provided to enable people involved in any form of money laundering, tax evasion or criminal activity to be caught and prosecuted. This would have led to a number of these people being imprisoned which is not the case at present.
The penalties should be suitably draconian and relate to the amount of tax which has been evaded. Instead of providing that some of the larger evaders may be jailed, the penalty should be mandatory jailing for amounts evaded above a specified minimum. This threshold should be set at £100,000. We should not shun this suggestion. It is important that we make it clear we are serious about penalising those people who have defrauded the system of money which could have been spent on essential services. This proposal would strengthen the Bill and ensure the greatest possible return of capital held abroad.
I should like strong mandatory provisions covering the disclosure by financial institutions of accounts, including accounts where nominees are used. In the past our financial institutions have been used for tax evasion purposes. In view of the abolition of exchange controls and the free movement of capital, it is necessary for the disclosure provisions to be made more effective. The Bill provides for access by the Revenue Commissioners to accounts held in various financial institutions. However, if the money is held in nominee accounts that accessibility is useless. I ask the Minister to address this issue. I understand that people who open accounts in other countries, for example, the USA, must disclose their social security numbers. This means that these people are immediately identifiable. The practice of using nominee accounts to evade tax cannot be tolerated in the future. I ask the Minister to make it clear that people who hold bank accounts must be clearly identifiable. Recent reports suggest that there are something like 15 million bank accounts in Ireland. Obviously this is excessive in view of our population.
If the amnesty raises the expected revenue, the Government and Minister should indicate that any budgetary surplus will be earmarked for expenditure programmes which will benefit the disadvantaged in our society, particularly those who have neither the income nor opportunity ever to have the luxury of paying taxes, not to speak of getting involved in tax evasion.
I am concerned at the criticisms made about balancing the books through the mechanism of once-off cash injections. The objection to the use of receipts from privatisation to balance the book is equally valid in terms of the amnesty. It can be argued that the previous Government was over-enthusiastic in cutting personal tax rates as a result of revenue buoyancy, which had been brought about by the previous amnesty, and strong economic growth. I estimate that since 1987-88 some £200 million per annum has been acquired either through the previous tax amnesty or the sale of State assets. This is an artifical source of income and it should not be used to balance the books. Obviously we cannot continue to rely indefinitely on this quick fix method of acquiring cash to balance the books. There is no substitute for tax reform, which is the key to ensuring an adequate amount of money to provide the State services that a democratic society requires to ensure that the less well off, the sick and the old have the level of service required by a civilised community.
The objection to the 1 per cent income levy which was pitched at too low an income and thus was an unfair imposition on the PAYE sector, can be dealt with in the next budget if there is the expected revenue yield from the tax amnesty. We cannot rely, however, on the proceeds of the amnesty to fund existing ongoing commitments, never mind embarking on any new major expenditure programmes. We should specify that the money from the amnesty is directed to the section of the community that never had the opportunity to evade taxes or to that section that has paid its taxes, namely the PAYE sector, in order to alleviate the burden in the latter case and provide some benefit for the former. Quite clearly the Government should target any money collected in that beneficial and productive fashion.
Let me register my concern that this should be the last amnesty. I know the Minister has indicated that this is his intention. We need to firmly uphold the principle that the law applies equally to every citizen and those covered by Irish as well as European law. We must make it clear that there cannot be an ongoing situation whereby those who have operated in a devious and less than legal fashion are seen not to be penalised but effectively to benefit from their nefarious activities. We have to put behind us even the slightest suggestion that powerful individuals can gain an advantage from members of the Government, Members of the Oireachtas, or, indeed, any elected public representative. Any whiff that lobbying influenced the activities of any Government must be dissipated and we must not allow the notion go abroad that powerful forces who have money to spend can influence Government decisions. That should be an important priority for Government. We have to support the principle that the State will be used only as an organ to discriminate positively in favour of the weak and disadvantaged, that the powerful and privileged will be restrained and that we will ensure they pay their fair share of taxes. That is the essence of a democratic state. When we are seeking to strike a balance, it should be in favour of the less well off in our society and should help to alleviate the burden of their circumstances. It must never be in favour of the rich and privileged.
It would be helpful if the Minister for Finance were to indicate on Report Stage that this is the last chance that serious tax evaders will have to legalise their affairs. That must be indicated to them very clearly. It must also be indicated clearly that the penalties for failing to do so will be very severe and on a different scale from what currently applies to those who have fallen behind in their payments or under-paid the amount they actually owe.
Will the Minister further examine the provisions in relation to confidentiality? It should be the intention of the legislation to ensure that what has happened in the past will not happen again and therefore it is important that we seek to close the loopholes that exist. From that viewpoint, it is not the best idea to keep revenue from the tax amnesty a confidential matter internally. This should not be confidential within the Revenue Commission but it should not be disclosed publicly. We must make maximum use of the information when it becomes available to ensure that the Revenue Commissioners are able to do their job satisfactorily, that loopholes are closed and that procedures are streamlined in the future. That would be of enormous benefit to us. We have embarked on a very delicate process because the public will become cynical about Government if they see that people, for no good reason, can get away without paying their fair share of tax and therefore we must be very careful how we implement this Bill.
On the positive side, the moneys will be used to the benefit of the people and the community. We must ensure that happens but we must ensure that this Government or any further Government will not embark on a similar course. I believe if we come back in five years' time to look for another amnesty, the public will throw it in our faces that this was the last opportunity for those either in arrears or who had evaded tax to put their affairs in order, and now we are being presented with another amnesty. We would lose our credibility. The process of democracy in this country, as in other countries, is under considerable threat and minute examination by the media which is very demanding, and by the public who are equally demanding. We have to ensure that our activities are seen to be above partisan considerations.
While I see the benefits that can be gained if the expected revenue is forthcoming, and the way it can be used, I do not welcome this legislation whole-heartedly. Let me echo a warning that we must ensure that the money is used properly, that it will be the last time that an amnesty can take place. In the final analysis we need to heed the views of the public at large and ensure that our democracy is not undermined by any cynicism which arise as a result of this Bill.
I am glad to have the opportunity to speak immediately after that example of justice and economics. The fact that Deputy Costello called three times for this to be declared the last amnesty reminds me of the story that my colleague, Deputy Cox, told this morning of ice cream sellers at the Munster finals. Next Sunday in Limerick they will be selling the last of the ices at least 17 times from the time they start until they finish. It was solemnly declared from the Fianna Fáil benches that the last amnesty would be the last one ever and never could such a thing be contemplated again. I wonder if Deputy Costello and I will be around to comment on the next amnesty that will come out in 1977 if Fianna Fáil——
In 1997.
In 1997 —— if Fianna Fáil is still in power and kept there by the Labour Party.
Perhaps it will be the Progressive Democrats Party and Fianna Fáil.
If it is the Progressive Democrats Party and Fianna Fáil we will not have an amnesty of this kind because it would be only the Labour Party that would stomach it. Deputy Costello finished his oration with references to hypocrisy. I thought that was not the happiest of phrases for him to use. If he believes one-tenth of what he said he certainly would not be voting for this Bill but I suppose we will see him troop through the lobbies afterwards. What that is called is a matter for him.
In the 75 year history of this House many Bills have been introduced from time to time by the Government of the day which met with the vehement and often passionate opposition of Deputies who disagreed with the policy being pursued in those Bills. Sometimes Bills were dropped altogether as a result of the opposition expressed to them over a period of weeks or months; sometimes Bills were significantly amended to take account of strongly held views; sometimes Bills were forced through and in some cases afterwards were found to be unconstitutional, or were repealed at the instance of succeeding Governments.
Never, however, in anything that I can recall, or that I have read, was a Bill introduced in this House for the purpose of protecting and benefiting criminals and other members of a privileged Golden Circle, some of whom seem to dominate our economic and commercial life. This Bill is, therefore, unique. What is especially disturbing about it, apart from its obnoxious terms is the fact that its Second Stage is being debated over a period of about six hours and there is no interval before the Committee Stage, which takes place not in this House but in a Select Committee. Unless sections 2 and 3 are withdrawn, which would remove the entire point of the Bill, it seems to me that this Bill is not capable of worthwhile amendment. If any form of honour and integrity in our public administration is to be maintained, and if the principle that "crime does pay" is not to be enshrined in our public law, then this Bill must be withdrawn.
Because this Bill is now much longer and more complex and covers far more areas than the original proposal of four weeks ago, relating to so-called "hot money" held in overseas bank accounts, there is a danger that we will become bogged down in criticism of the detail of this Bill, and that we will lose sight of the fact that it is the first Bill ever introduced in Dáil Éireann for the purpose of rewarding criminals and crime, and protecting them from investigation.
The morale of the public service must be seriously affected by a proposal like this, most particularly the morale of the Revenue Commissioners and their staff of thousands who are now going to be told by the Legislature of this country, if this Bill is passed, that they are to turn a blind eye to criminals who cheat, defraud and make false declarations. They are told that they are to protect the anonymity and "good" name of these criminals, but they are to continue to administer the law in such a way that it will bleed dry hundreds of thousands of compliant taxpayers who have the gravest difficulty in meeting their obligations, but who endeavour to do so often at huge personal cost to themselves, their families and, if they are self-employed, their businesses.
Is there any other country in Europe or in the civilised world, outside of banana republics and corrupt dictatorships, where the law-abiding, compliant citizen is penalised and the corrupt fraudster who evades his lawful taxes is protected, favoured and nurtured? It is a principle of our Constitution that an act cannot be retrospectively declared to be a crime if it were not a crime at the time it happened. Our constitutional lawyers can now apply themselves to the unique proposition that this Government subscribes to the view that the corollary of that principle is not true and that an act which was, and is, a crime will be retrospectively declared immune from prosecution for those who avail of the terms of this Bill. For those who do not avail of the terms of this Bill these matters will remain a crime.
If the principle enshrined in the Bill of giving immunity and anonymity to criminals who breach the Income Tax Acts and the Exchange Control Acts is accepted by this House, why should we not logically extend the same immunity and protection to criminals who breach other sections of our criminal law, such as the Offences Against the Person Acts, or who commit felonies against common law such as murder or manslaughter? If one is to be given immunity, protection and legislative approval for having defrauded the public purse by the actions of this House, why should this House not give equal approval, legitimacy and immunity to those who commit the less serious crime of defrauding an individual or a company?
I want to come now to some of the provisions of the Bill and to spell out precisely how they offend the general principle of integrity in our tax system, in our public administration and in our constitutional and legal provisions about equality of citizens before the law; how, in effect, they offend against the very basic principles of a Republic, and why I would hope that some of those sitting opposite me in this House would for once stand by that Republic, rather than stand by the sleazy associates of some of those who lead them.
In section 2 — apart from the gross inequity of somebody who has defrauded the Revenue being allowed away with a payment of 15 per cent, where a compliant taxpayer would have paid as much as 60 per cent or more — there is a particularly grotesque anomaly which underlines the whole corrupt approach of the Government parties to this matter. Subsection (2) (b) (v) states that the main or 15 per cent amnesty shall not apply to tax which was not paid by virtue of a tax avoidance scheme. A tax avoidance scheme is an arrangement whereby somebody arranges his affairs in such a way as to seek to avoid liability for tax while remaining within the law.
However, subsection (2) (b) (vii) removes that exclusion, and thereby includes in the 15 per cent amnesty those who acted illegally by evading as opposed to avoiding tax, and those who acted illegally by not complying with the Exchange Control Acts. This is a monstrous preference of those who blatantly and deliberately broke the law over and above those who tried to remain within the law. Needless to say, it is even greater preference and a more monstrous act of favouritism of criminals as against those who actually complied with the law and paid their taxes. Furthermore, somebody who either paid his taxes, or who sought to remain within the law, will not be given a certificate by the chief special collector protecting him from further investigation, but someone who deliberately broke the law, and made no bones about it by setting out to evade tax and to breach the Exchange Control Acts, will be protected by such a certificate and the Revenue can never approach him again about that tax, or about that period, or about his sources of income.
The provisions regarding tax avoidance schemes, as opposed to straightforward tax evasion, will have another curious result if this Bill is passed. Prior to 1974, I understand it was common for wealthy people to transfer assets abroad and not to draw the income from those assets, but to place them in the name of a company and to take loans from the company. These loans were not taxable. In 1974 it was provided in the Finance Act that such income was taxable unless the resident here could show that the arrangement was not made for the purpose of avoidance of tax. The Act provided that such a scheme was a tax avoidance scheme unless it was certified to the contrary by the Revenue Commissioners.
Such money, therefore, which is abroad and which has not been certified by the Revenue, will not benefit from this amnesty as set out in section 2. If it were certified by the Revenue Commissioners it would not have been "hot money" but would have been known to them. Therefore section 2 ensures that the benefit of the Bill will not apply to "hot money" abroad held in these particular circumstances and the provisions of the Bill, as now set out, run counter to the purpose of the original alleged scheme. It seems to me that in trying to broaden this amnesty to take account of the initial criticism of it, the Government and the Minister have now lost sight of what was allegedly their original objective. Why should any such uncertified money held abroad in these circumstances be brought back?
The benefit of the amnesty is lost according to section 4 if the declaration made to the special collector is false. Section 5 allows an inspector of taxes to make an application to the appeal commissioners for a declaration that the certificate of the chief special collector was issued on the basis of incorrect information. The onus appears to be on the inspector to prove this, but I fail to see how he can prove it by virtue of the terms of section 7, which impose virtually total confidentiality on the special collector, who cannot show any documents or give any tip-off to the inspector, even though they are both working for the Revenue Commissioners. Neither the appeal commissioners, nor subsequently a judge, can see the declaration made by the person trying to avail of the amnesty. How therefore can they conclude that it was a false declaration?
It follows from this therefore that if he can obtain a form of settlement certificate from a special collector, a non-compliant taxpayer relying on section 5 (1) can tell the inspector of taxes, or the Revenue Commissioners generally, to get lost. It may well be that a dishonest adviser — and I regret that such exist — could advise a criminal for whom he is acting that if he declares some nominal income of, say, £100 under section 2, and pays £15 and gets a certificate to that effect, he makes it very difficult for an inspector of taxes to pursue him further.
The special collectors appear to have a totally passive function. They appear to be there simply to receive declarations and cheques and not to investigate anything. They do not seem to have power under the Bill to ask any questions or to pursue inquiries. They will never know whether a declaration made represents assets or income understated. If any meaningful assessment is to be made as to the truth or otherwise of a declaration, the Revenue would need to know and be able to distinguish between the two of these.
Take the case of somebody who has five separate accounts abroad of £200,000 each. He declares £450,000. In order to prove that the declaration was false the Revenue would have to find three or more of those accounts. The possibility of Revenue doing so may well be very remote. It may in fact be impossible if it has to try to investigate it without any access to the declaration itself. It must be about the most daunting legal challenge of all to prove the falsity of a declaration that one has never seen. It reminds me of the problems I faced in trying to disprove what was allegedly in documents that I was never shown.
To whom are special collectors to be accountable? It seems from the provisions of the Bill that they are accountable to nobody. If they are asked questions by the Revenue Commissioners they can and must plead section 7. These two amnesties are apparently to be of short duration and the payments have to be made by 14 January next. Where are the special collectors to be redeployed after their duties under this Bill end? Are they to go back into the Revenue and forget everything they learned as a special collector, even if matters relevant to their work in the Revenue already came to their notice as special collectors?
I am advised that the terms of section 13 of this Bill would appear to amount to an administration of justice under Article 34 of the Constitution. The section would therefore be unconstitutional if it does not come within the terms of Article 37, which allows limited administration of justice by persons other than judges. Whether or not it comes under the provisions of Article 37 is a moot point, but at the very least it raises serious doubts.
Apart from its possible unconstitutionality, section 13 is likely to have the effect of ensuring that money which is already within the banking system — including building societies — and in many cases legitimately so, will now leave the country in the absence of exchange controls. People, including compliant taxpayers, may simply not want to take the risk of this section being used against them. It would be one of the most amusing ironies of all if the provisions of this Bill were to frighten out more money than they bring in. Banks and building societies must be very fearful of the consequences of section 13 regarding the confidentiality of accounts which they hold. There are broader constitutional problems and doubts with regard to this Bill, the provisions of which are certain to be widely challenged, if and when it is passed.
The Supreme Court held in April 1988, in the farm tax case, that it is unconstitutional for the Government to suspend the administration of the law. It was held that it was the Government's duty to enforce the law unless the Oireachtas repealed it.
What is provided for in this Bill is the non-application of the law to certain people who have committed offences against the Income Tax and other Acts. One's feeling about the doubtfulness of such a provision is strengthened by the decision of the Supreme Court in the East Donegal Marts case in 1970, when it held that under the Constitution the Legislature cannot exempt individuals from the scope of legislation, as the Marts Act had purported to do.
What is this Bill doing except providing for non-application of law to certain people and for exemption for certain people? It does not provide for any refund for those who have paid their taxes, or for a refund for those who may have come to a composition with the Revenue before 25 May last. It, therefore, is not treating people equally. The inequality is heightened by the fact that it favours citizens who broke the law, as against those who complied with it. Is such a legislative scenario likely to survive?
Section 3 of this Bill applies not just to income tax but to a huge range of taxes, one of which is residential property tax. There are thousands of people who paid this tax each year as it fell due since its introduction about ten years ago. If they were late in paying in any one year they had to pay interest. There are thousands more who were liable for the tax but who did not pay anything. They are now given the opportunity to pay without any penalty or interest, and what they are paying now in money terms is worth a great deal less than the same amount of money was when the tax fell due. Will those of us who paid our residential property tax each year get a refund to compensate us for paying on time, and where appropriate for paying interest?
The same principle can be applied to any of the taxes. The sad sorry lesson at the end of it all is that if this Bill is passed, as the Government have prepared it, the clearest possible signal goes out that if one obeys the law one is penalised; if one evades the law, and does not comply, one is rewarded.
If this House enacts that principle, it is saying that we are a sick society and anyone who fulfils his or her obligations to that society is a fool, and that the wise ones in this society are those who thumb their noses at law and at duty. The even wiser ones are probably those who leave this society, saying as they go "Republic of Ireland, requiescat in pace”.
Mr. Byrne
I wish to share my time with Deputy Ó Cuív.
Is that agreed? Agreed.
Mr. Byrne
I am pleased to have the opportunity to take part in this important debate. A tax system that is fair in intention and equitable in implementation is at the heart of any democracy. This legislation was introduced because our tax system has not been equitable in its implementation. Tax amnesties are the sign of a flawed system. This Bill in particular highlights not only a flawed system, but an unfair society.
The famous New York hotelier and socialite, Leona Helmsley, famously remarked a few years ago that "only the little people pay taxes". The values of Reagan's America are, it seems, to be the values of Ireland in the nineties. This Bill sends out the signal that greed is good. It seeks to enshrine into law a crooks' charter.
Unlike the Opposition, I do not seek to deny reality. That reality is that huge amounts of uncollected and probably uncollectable taxes remain outstanding. The further reality is that moneys collected under the terms of this Bill are welcome.
Fine Gael's ever-changing position towards a tax amnesty is as distasteful as it is bewildering. The Fine Gael Party went before the electorate in the general election of 1989 advocating a tax amnesty. Some weeks ago the Leader of the Opposition publicly opposed a tax amnesty. To his apparent surprise and very public anger his Finance spokesman, Deputy Ivan Yates, had already favoured the idea of an amnesty. Deputy Yates had tried to influence this year's Finance Bill to that effect on Committee Stage. His latest views on the matter are not only in complete opposition to an amnesty, they are also a complete contradiction of his own previously stated views.
Not so.
Mr. Byrne
Deputies John Bruton and Ivan Yates are exposing a position that is in complete contradiction of stated Fine Gael Policy.
Fine Gael's record in this House in the last few weeks has been a shameful shambles. Hares, hookers, homosexuals and hot money have left the party twisting in the wind. Deputy Bruton's Fine Gael has not even the courage of its own confusion. A weak and divided Opposition is of little service to democracy. Fine Gael instead of exposing weakness in Government policy chooses instead to expose its own weakness. The Opposition is a laughing stock.
I want to tell the Government and the House that if not on the Opposition benches then certainly on the Government backbenches there is a watchful and constructively critical body of Fianna Fáil Deputies. If necessary, we will be both Government and Opposition.
Good man. I am with you.
Does the Deputy remember the "Club of 22"?
Mr. Byrne
The Minister, Deputy Ahern, conservatively estimates a return of £200 million from this amnesty. I have no opposition in principle to the idea of an amnesty. £200 million is to be welcomed at any time. My fear is that too many hostages have been handed to fortune. The little people, the PAYE workers who pay 88 per cent of all income tax collected by the State, are deeply angry and they have every right to be so.
In the last budget a 1 per cent levy was imposed on incomes. I said then, and I repeat now, that it was a grave mistake. In the context of economic policy it is anti-employment, anti-growth and, in effect, contraditory of the Government's stated economic aim. In the context of this debate, it was a deeply inequitable tax. This amnesty adds insult to injury. We are told that this is to be a once-off amnesty. However successful, amnesties are seldom once-off.
There would seem to be two critical aspects to this debate, the first, in regard to where the money collected is going as distinct from where it might come from and the second in regard to the notion of an amnesty culture. Moneys collected under this amnesty constitute an unfairly small proportion of the ill-gotten gains of a golden circle. It is imperative that those moneys are not used to further already deeply ingrained inequities in Irish society.
It is totally unacceptable that money from this amnesty be poured into the bottomless pit of the public service pay bill or into more time-serving, money-wasting, overlapping, bureaucratic State boards and agencies. It is totally unacceptable that money be poured as subsidy into inflated public spending programmes.
The only use worthy of the 30 bits of silver the Government intends collecting is reduction of the national debt and reduction of taxes for the PAYE sector. Scandalously, no progress was made in either of these areas in the last budget. Instead scarce resources were devoted to cosseting the privileged. That is what the public service pay bill amounts to. There are as yet no signs that the Government has to stomach to tackle this crucial issue. If this money is used to take the soft option in the next Programme for Economic and Social Progress talks then effectively Ireland's two golden circles will be cross-subsidising one another. The Government will be pimping for parasites.
The Government should be aware that interest will have to be paid on their new found gains. The first price they will have to pay is a growth in public cynicism. The belief in the existence and untouchability of a golden circle is being perpetuated. There is a correspondingly deep disbelief in the finality of this present arrangement. By granting another amnesty so soon after the last, the Minister has created an amnesty culture.
When the discussion about the tax amnesty started, I had grave reservations about it. All of us who always pay our taxes on time feel that everybody should share the burden. Some of this debate reminds me of the Kerryman who was asked directions to Dingle and whose answer was, "If I was you, I would not start from this point at all." Of course, we should not be where we are. We should not have had a collection system that was totally ineffective in the seventies and eighties when not only Fianna Fáil but Fine Gael and Labour were in Government. We should have had a tax system that was effective, simple and equitable. The same can be said of the social welfare system. If we were proposing a tax amnesty without also proposing similar measures in the context of social welfare, I would find the idea of an amnesty very hard to accept.
That is humbug.
The reality is that there have been crazy provisions in the tax law and social welfare laws and it is time we got our act together.
On a point of order——
Will the Deputy let me finish?
Is it in order that the Deputy be allowed to mislead the House into believing that there is some comparison to be drawn between small-time social welfare fiddlers and multi-millionaire gangsters who are salting their money away and breaking the law of the land?
That is not a point of order.
Enough is enough. I put it to the Minister for Finance that the line must be drawn and this amnesty must be linked with total reform of our tax and social welfare systems.
How does the Deputy explain the confidentiality requirements then?
The Deputy in possession, without interruption, please.
There has been much talk of tax cheats but I do not represent the multi-millionaire tax cheats Deputy Rabbitte referred to. One would be living in an unreal world if one believed that non-compliance with the tax laws is only the preserve of well-heeled people. Many people visit my clinics who have not complied with the tax laws, but those people are on the breadline. They cannot pay the amount requested in respect of interest, penalties and tax. Perhaps I am the only Deputy whom such people approach. The number of people attending also relates to the unreasonably low level of exemption limits and the position regarding pensions as opposed to unemployment benefits. Pensions are taxable. Many old age pensioners own small farms. There are widows in receipt of contributory pensions who in the past may not have completed a tax return and who probably owe tax. Those people may owe amounts of only £3,000 to £4,000, but they may not have such money. I am referring to people whose gross income per year is approximately £4,000 to £5,000. I know the tax inspectors have a job to do, but I have heard those people being asked for sums of money which they do not have.
This Bill is not about those people.
Of course it is about them. Those people slowly but surely are rightly being brought into the tax net, but the tax laws must be reformed in respect of such people.
This Bill will put those people in prison.
It will not.
The Deputy should read the penalty section.
The Deputy in possession, without interruption, please.
This Bill is not about grannies with money under the mattress.
I represent an area where most people depend on social welfare benefits and pensions. I have seen those people drawn into the social welfare system because of the requirement to have tax numbers for various Government grants. I have favoured the issue of RSI numbers to such people, but I know that if those people are drawn into the tax net it will not be possible to collect money from them in respect of interest and penalties for a ten year period. Those people do not have the money to meet that commitment.
I do not represent people involved in big businesses, but if it is not possible to collect the money in any other way it should be collected by way of amnesty. The position is somewhat like a shopkeeper who provides credit. Perhaps such credit should not have been given in the first place. If it is not possible to collect such moneys in other ways, it should be collected in this manner on a once-off basis. Half a loaf is better than no bread at all. I support this measure on the condition that henceforth all loopholes will be closed, that people will not say they are not in favour of RSI numbers being issued in respect of everyone and that the Opposition will row in behind the measures which need to be taken in future to ensure that tax is collected effectively.
The damage is done until the next amnesty.
I would draw an analogy between a country shopkeeper who allows his customers credit and is not too concerned about collecting the money but then decides to change to a supermarket system where the customers must pay for goods as they buy them. In the transition the shopkeeper would encounter problems with his customers in the operation of his business. If his customers were asked to pay all the money they owe in one day and were told that in future they would not be able to purchase goods in his shop unless cash was paid up front, we all know what would happen. That is the unfortunate position in which we find ourselves; it is a legacy of previous Governments. This amnesty, linked with social welfare and tax reform, should be provided as a final measure to give people a chance to straighten out their affairs, whether they are big or small business people.
Pay 15 per cent.
There are many people involved in small operations who owe tax. The amnesty is a practical, if not ideal measure, of collecting this tax and providing people with a chance to straighten out their affairs. Henceforth the taxes should be collected in an effective and efficient manner.
The Deputy will never be a small operator making a speech like that.
Deputy Rabbitte, I understand the small operators whom I represent and I am aware of the problems they face.
This Bill is not about small business people. It will put small business people behind bars.
If a widow has a small farm which provides an income of £3,000 or £4,000 and has not made a tax return in respect of that income——
She will go to prison under the provisions of this Bill.
——she is protected under the interest and penalty section.
The fellows in Jersey will bring the money——
(Interruptions.)
The Deputy in possession without interruption, please. It would be helpful if the Deputy would cease addressing his remarks to people across the floor and speak through the Chair.
Bhéadh sé níos éasca é sin a dhéanamh dá mba rud é nach raibh an dream thall ag cur isteach orm. Is léir nach rabhadar ag éisteacht liom ag an tús.
If this issue referred only to bringing the money home I would find it difficult to accept. However, I accept the modified and changed circumstances which we face now in that everybody is being provided with a once off chance to get their affairs in order. We are reforming the tax system as the Progressive Democrats wanted us to. I have asked for a long time for reform of the social welfare system. Reform of the two systems must be linked. It is practically impossible for somebody on the dole to legitimately comply with means testing regulations. The people should be given a break and a line should be drawn now to ensure that as from 1993 onwards there will be full compliance with the tax laws and in 20 years time I hope we will not have to deal with this matter.
Perhaps there is a difference between rural and urban areas in relation to outstanding taxes. I am aware of cases in rural Ireland where outstanding taxes are owed by people, but they have found that the cost of paying their taxes is beyond their capacity. Interest and penalty relief for those people would mean that they could get their affairs in order and not become bankrupt in the process. They would then have to comply with the tax laws in the future. This is the aim of this measure and it is one of the ways the Progressive Democrats informed us we would have compliant taxpayers in a rational system.
I cannot say I am happy to speak on this Bill because it brings shame on the House. This Bill was initially to deal with "hot money" invested in accounts on offshore islands. It was also to provide for people on social welfare or those who were cheating the social welfare system. We now have a total amnesty to provide for those who have not paid their tax on interest and so on. The Minister realised when he first mooted this tax amnesty and promised millions of pounds for other purposes, that the amnesty on "hot money" would not provide such sums and he has now introduced other measures. He has taken away the respect of this House, because nobody believes in the workings of this House any longer. The Labour Party has accepted the few pieces of silver and a recent contribution we heard supported that. They do not believe in the measure but because they think they will recoup a few pounds from it they are prepared to continue their support.
What do we do about the new poor? The new poor, and I have spoken about them in this House previously, are those who pay their taxes, especially the PAYE sector. Because they are a few pounds over the income limit they are unable to obtain grants for college fees or for maintenance. Those who are paying their taxes and who have met all the requirements of the laws are unable to get medical cards and avail of services such as free school transport. Yet those who invest their money outside this country and who cheat the taxation system can afford to employ auditors to help them avoid paying their fair share of tax. They place their money in offshore island accounts and because of this measure they are allowed off scot free. Admittedly, they will be required to pay 15 per cent but that is minimal compared to the penalties suggested for the small farmers, for example, who were mentioned by my colleague, Deputy Ó Cuív. They will be sent to jail. We have been debating recently the various categories of individuals who will be jailed, yet the real criminals walking the streets of Dublin will escape.
We are promoting tourism as a saviour for jobs yet many family hotels and public houses were refused licences in the past year because their tax affairs were not in order. Small farmers affected by TB and other diseases in their herds cannot obtain grants due to them unless they can produce a tax certificate. Those applying for headage grants next year must also produce a tax certificate. I cannot believe that the Minister will force those individuals to keep their affairs in order while others organise their business in such a way as to avoid all the penalties it is intended to impose.
Deputy O'Malley stated that this new Bill will force money out of the country. This is clear from the reaction I have received during the past few days from old age pensioners and others who are coming near the end of their days. They have invested a few pounds in building societies, a couple of thousand here and there, to ensure sufficient funds for their families to provide them with a decent burial. This money will now be examined in detail by the Revenue Commissioners to ensure that those people pay their fair share of taxes. They may lose their social welfare entitlements and there is no doubt that some of them will take their money out of the building societies and perhaps put it under their mattresses, leaving themselves open to be burgled in the middle of the night. That is what this Government is forcing on people and we cannot be proud of it.
We have heard on a number of occasions today that this amnesty represents the last chance for tax cheats. We are told the same in 1988. How long is a piece of string? That is the real question. The message will leave this House that if one is good at fiddling the books one can persuade the Government that it is worthwhile to give an additional few pounds to individuals for good deeds done, which will result in another tax amnesty.
Obviously I will welcome the money if it comes in. I hope some of it will be spent on the roads of Cavan-Monaghan. I was talking to somebody today who had visited the Golf Classic in that area and could not understand how we can live there, the roads being so poor. Our hotels are great and we would welcome the Minister if he decided to visit.
I believe the golf courses are good also.
The proceeds from the amnesty could be used to improve our roads, provide funds for the handicapped and for those who have no jobs. The Minister cannot justify this Bill in any format and before it is too late I would ask him to withdraw it. I wish to share my time with Deputy Browne.
(Carlow-Kilkenny): If there is sufficient time available I wish to share my time with Deputy Sargent.
The Minister has graciously given some of his time to the Deputy, who has four minutes remaining.
(Carlow-Kilkenny): Regarding the 1988 amnesty, Barry Desmond stated:
It is fundamentally wrong because in three years time people will be baying for another tax amnesty and perhaps a future Minister will introduce it.
I thank Deputy Finucane for highlighting that statement. Unfortunately Deputy Kemmy is not present in the House to hear those words because they may have helped him to change some of his views.
This amnesty represents an amazing course of action by any Government. I hope the Minister for Education will not become caught up in this attitude and reward lazy students by giving all of them As in their leaving certificate results. Perhaps the story of the prodigal son is being adopted by the Government and it is prepared to forgive everyone for their offences. It is about time that good was rewarded, that honesty was seen as the best policy and that we no longer gave credence to those who break the law while ordinary citizens, much to their annoyance, are paying their fair share of taxes.
The phrase "fat cats" has been used in this debate to describe certain people. There are only "thin cats" in the PAYE sector because anything they have the possibility to earn is deducted direct from their salaries. I never had to worry about locations in which to invest my money. One small pocket contained most of what I had.
Listening to some of the contributions of the Labour Deputies it is true to say that Stonewall Jackson is alive and well. They are coming out of the woodwork to defend the indefensible. My colleague, Deputy Crawford, referred to third level students not being eligible for grants. They qualify for nothing. They are taxed to the hilt and are required to obtain overdrafts and pay interest on those overdrafts to obtain an education. Some of them may have paid a rate of 48 per cent. The Minister will now reward those who had the use of this money abroad and they will be required to pay a mere 15 per cent. There is no justice in that and I hope we will hear no more about ethics in Government from a Government that obviously does not understand what ethics in ordinary life is about.
Small business people around the country are being harassed by individuals from the Revenue Commissioners who are checking VAT and PRSI payments. At times this is done in a way that can frighten certain people. I am aware of two women who closed their shop because they could no longer tolerate VAT inspectors visiting them to check their records. Those are the people who are paying their way. We do not mind putting them out of business, knocking on their doors and convincing them they are criminals. With this Bill we are thanking those who did not pay their fair share of taxes.
We will have special inspectors sworn to secrecy while, at the same time, people who are in dispute with the Revenue Commissioners, particularly publicans whose gross profits can be jacked up when the Revenue Commissioners visit a premises, suddenly find they are sent a new bill, an argument ensues and their names appear in the paper. This is done even though these people genuinely wish to pay their tax. There may have been a difference of opinion in regard to the amount due as assessed by the Revenue. The financial institutions will be fined £15,000 and an additional £2,000 for not declaring a person's investment. There is also reference to special collector, who including the chief special collector, who seems to be the master of secrets in society. Honesty has not been rewarded. The excuse that high interest rates encourage people to take their money out of the country is unacceptable. PAYE taxpayers pay high interest rates and they stand by the country but they get very little reward. Instead they were asked to pay a 1 per cent levy.
Ba mhaith liom mo bhuíochas a chur in iúl don Aire Airgeadais as cúpla nóiméad a thabhairt dom chun dearcadh an Chomhaontais Glas a chur os comhair na Dála i dtaobh an Bhille seo. It is strange to hear people saying that half a loaf is better than none. This is a very simplistic view which does not help because if we take the analogy further, half a loaf may lead to food poisoning. The amnesty will be damaging to the country from an ethical and economic point of view. It has already had a backlash as can be seen from the letters which I and, I am sure, many Deputies have received. One letter I received expresses disgust at the amnesty for hot money. Another letter refers to a mother on a contributory old age pension who had to pay £25 tax in the 1992-93 tax year. This person wonders why other people are allowed pay only 15 per cent tax. This amnesty will further lessen the esteem in which this administration is held. For example, people cannot understand why telephone charges are being increased while at the same time TDs are allowed free phone calls, why flats in Mespil Road are sold at low prices to certain people and the use of the Government jet at a time when Aer Lingus experiences great difficulties.
What about the £8 billion?
Double standards exist throughout the country. Economically the desperation seems to be very obvious. To suggest that money injected into the country in the form of an amnesty will create jobs for the unemployed is questionable. Is this matter being analysed in a rational way or is the amnesty being introduced in desperation? I have yet to be convinced that the money collected as a result of this amnesty will create jobs, as suggested by the Minister and the Taoiseach.
In the sixties investment created jobs, but current financial evidence is that capital investment often results in fewer jobs because it encourages automation and rationalisation, as in the case of Guinness and Aer Lingus. Many employers take this course, yet we are ensuring that more capital is pumped into the economy. We are dealing with an ethically and economically indefensible measure. I hope the Department's thinking will change to take account of the fact that we should concentrate on the redistribution of wealth and the guaranteeing of basic incomes as options.
I thank the Members who contributed to the debate on this legislation. In the time available to me I will deal as comprehensively as possible with the main points raised. Tomorrow we will have an opportunity on Committee Stage to go into the provisions in greater detail. There are only 15 sections in the Bill and we will have ample time to consider them. The reason I was absent from the Chamber was to consider some of the issues raised by party spokespersons this morning.
The main objectives of this amnesty are to provide those who failed to meet their tax obligations in the past with a final opportunity to regularise their affairs. This opportunity is being given in advance of the introduction of more stringent penalties for tax fraud and against the background of the ongoing intensification of Revenue's compliance programmes. In recent years Revenue has been much more successful in closing loopholes and moving generally on non-compliant taxpayers.
The 1988 amnesty was very successful in bringing people into the tax net. However, it was a failure in terms of retrieving money held in accounts abroad. The figure I quoted many times, and which has been quoted by Revenue, as to the number of accounts involved is 379 but the figure quoted by Deputy Rabbitte is slightly higher at 400. I presume that figure includes cases which subsequently came to light. However, we will not argue about figures. A very small number of such accounts were detected on the last occasion. This amnesty is designed to deal with dormant accounts which were not disclosed in the 1988 amnesty.
A large number of so-called compliant taxpayers who have their affairs in some order do not pay their full tax. This is the case in all sectors. I was amused listening to Deputies—I exclude Deputy Rabbitte who is consistent in this matter — talk about the people involved as if they are all millionaires. That is not the case. I receive hundreds of letters each day about revenue matters concerning owners of small shops and businesses, tradesmen and professionals who suppress their income each year. There are 15 million deposit accounts in the State.
I welcome the change in attitude to this matter in the past 12 months. I was berated in this House last year by all but one Deputy for closing in on non-compliant taxpayers — even many of my colleagues thought I had gone over the top. However, I welcome the support from Members on all sides today for a compliant society. We have now reached a position where we might be able to achieve success.
Shame forced the Minister to change the terms of the amnesty.
The Minister should be allowed reply without interruption.
I will deal with the Deputy's views on these matters on another day.
The Minister could deal with some of them today.
I would do so if I had time.
I wish to refer to a matter that was raised a number of times today, not by Deputy Yates, but by a number of his colleagues.
The Minister is very reassuring.
Three of four weeks ago Deputy Yates was working from the very detailed Fine Gael policy document of 1989. I will quote from it.
I have read it.
The Minister has only a few minutes.
Were there questions to the Minister about it?
There were several questions. Deputies Browne and Seymour made a particular point with which I want to deal. I will quote just on the point that was raised.
I am acutely aware of this.
I am not interested in talking to Deputy Yates but to his colleagues who seem to think that the Deputy is out of line.
That was then.
I know it is painful.
The Minister, without interruptions, please.
(Carlow-Kilkenny): Look at what the then Deputy Barry Desmond said in 1988. He said that it was fundamentally wrong.
(Interruptions.)
The Minister has four minutes.
The Minister is wasting his four minutes with these diversionary tactics.
On the contrary, I spoke for only 20 minutes this morning and I have listened carefully all day. All Members have referred to the confidentiality rules. I am just giving the one paragraph:
Fine Gael in Government will introduce an amnesty to allow persons to declare these capital sums. We will launch a special Government Stock which may be purchased with "black economy" capital. Those availing of the amnesty will have to forego interest for two years. Repayment will be accompanied by an Amnesty Certificate behind which the Revenue Commissioners may not look. Persons who avail of the amnesty will be required to bring their tax affairs up to date.
(Carlow-Kilkenny): It was rejected, Minister.
We lost that election.
Confidentiality rules applied. Without a confidentiality rule we will never get these people to be compliant taxpayers. We are speaking here about a lot of small business people. If we can get them into the tax system they will pay 15 per cent in income tax and capital gains and they will have the same anonymity clause for VAT. All of the others paid 100 per cent. They then must fill in their 1992-93 tax forms. Naturally enough, if they are unknown in the system they will have to fill in their 1991-92 tax forms as well. We are not working back on any limited period. Under section 2 the individual will come to the special collector and will declare the amount of undisclosed liabilities. If it is income tax or capital gains tax taxpayers will pay the 15 per cent. They will receive their certificates. They will fill in their 1992-93 tax forms by the end of next January and will pay the money by 14 December. If they are honest, following the amnesty, they have nothing more to worry about.
If they are dishonest, how does the Minister find out through the wall of secrecy in disclosure?
If they are dishonest, in a subsequent check a VAT inspector will see that a person who last year had £50,000 and this year has £250,000, he will then go to the appeals commissioner and will clearly show to the appeals commissioner——
The certificate is confidential.
The certificate is not confidential. The person will have to show to the inspector the figure he used.
So there is no confidentiality.
The Minister's yield is dropping as he speaks.
Will the Deputies listen? It would do them a lot of good. If a person has only declared £50,000 and has been suppressing income for a number of years and the accounts for 1992-93 show a figure that is out of line with what was declared under the amnesty, the inspector will ask to see the certificate and if the certificate does not hold up the inspector will go to the appeals commissioner and will show that it does not hold up and the amnesty will be over for that individual. Then the inspector will, in the normal way, go back through the years.
That is good confidentiality. That is the end of the amnesty.
All day, Deputy Cox and his colleagues argued about this but had they just asked me last night or read the explanatory memorandum they would have known that this was the way it would work.
We will have tomorrow for some of that smart stuff.
The Deputy is being smart. The Deputy argued against confidentiality and as soon as I explained it the Deputy started to talk me down. Every time I try to reply to the Deputy he tries to talk me down. The Deputy should just take his 20 minutes and I will take mine.
No questions answered.
As it is now 6.45 p.m. I am required to put the following question in accordance with an Order of the Dáil of this day on the amendment to the motion for a Second Reading in the name of Deputy Pat Rabbitte: "That the words proposed to be deleted stand".
Question put.
The Dáil divided: Tá, 65; Níl, 43.
Tá
- Ahern, Bertie.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, David.
- Aylward, Liam.
- Bhamjee, Moosajee.
- Bree, Declan.
- Briscoe, Ben.
- Broughan, Tommy.
- Burton, Joan.
- Byrne, Hugh.
- Callely, Ivor.
- Collins, Gerard.
- Costello, Joe.
- Coughlan, Mary.
- Cowen, Brian.
- Davern, Noel.
- Dempsey, Noel.
- de Valera, Síle.
- Doherty, Seán.
- Ferris, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Liam.
- Foley, Denis.
- Fox, Johnny.
- Foxe, Tom.
- Gallagher, Pat the Cope.
- Gallagher, Pat.
- Geoghegan-Quinn, Máire.
- Haughey, Seán.
- Howlin, Brendan.
- Hughes, Séamus.
- Hyland, Liam.
- Jacob, Joe.
- Kemmy, Jim.
- Kenny, Seán.
- Killeen, Tony.
- Lawlor, Liam.
- Lenihan, Brian.
- McCreevy, Charlie.
- McDaid, James.
- Morley, P. J.
- Mulvihill, John.
- Ó Cuív, Éamon.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Keeffe, Batt.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Rourke, Mary.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- Penrose, William.
- Ryan, Eoin.
- Ryan, John.
- Ryan, Seán.
- Shortall, Róisín.
- Smith, Michael.
- Spring, Dick.
- Taylor, Mervyn.
- Upton, Pat.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Eamon.
- Walsh, Joe.
Níl
- Ahearn, Theresa.
- Barrett, Seán.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Clohessy, Peadar.
- Connaughton, Paul.
- Connor, John.
- Cox, Pat.
- Crawford, Seymour.
- Creed, Michael.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Finucane, Michael.
- Fitzgerald, Frances.
- Flaherty, Mary.
- Flanagan, Charles.
- Gilmore, Eamon.
- Gregory, Tony.
- Harney, Mary.
- Hogan, Philip.
- Keogh, Helen.
- Lowry, Michael.
- McCormack, Pádraic.
- McDowell, Michael.
- McGrath, Paul.
- McManus, Liz.
- Mitchell, Jim.
- Molloy, Robert.
- Nealon, Ted.
- O'Donnell, Liz.
- O'Malley, Desmond J.
- Quill, Máirín.
- Rabbitte, Pat.
- Sargent, Trevor.
- Shatter, Alan.
- Sheehan, P. J.
- Timmins, Godfrey.
- Yates, Ivan.
Tellers: Tá, Deputies Dempsey and Ferris; Níl, Deputies Rabbitte and Gilmore.
Question declared carried.
Amendment declared lost.
I declare the Bill to be read a Second Time in accordance with Standing Order 93 (2). When is it proposed to take Committee Stage?
Under Standing Order 94 (1) of Standing Orders Relative to Public Business, the Waiver of Certain Tax, Interest and Penalties Bill, 1993 shall be referred to the Select Committee on Finance and General Affairs in accordance with paragraphs 1 to 3 of the terms of reference of the committee. It is proposed to take the Committee Stage tomorrow, Thursday, from 10 a.m. to 4 p.m. and on Friday from 10.30 a.m. to 1 p.m. The Select Committee will report back to the Dáil on the Bill not later than Tuesday, 6 July 1993.
Is that satisfactory? Agreed.