Amendment No. 1 is deemed out of order. Amendment No. 2 in the name of Deputy Rabbitte, is related to amendment No. 61 and therefore it is proposed to take amendments Nos. 2 and 61 together.
Waiver of Certain Tax, Interest and Penalties Bill, 1993: Report and Final Stages.
I move amendment No. 2:
In page 3, to delete lines 21 and 22 and substitute the following:
"`Chief Special Collector' means an officer or employee of the Revenue Commissioners appointed under section 7 (3);".
I take it that you, Sir, are not permitting me to move amendment No. 1.
I indicated already that amendment No. 1 has been ruled out of order on the basis that it is merely declaratory in nature.
It is a useful position.
I accept your ruling that it is declaratory, nonetheless it is important to declaim accurately the contents of this Bill. I regret I am not permitted to explain to the House why I believe the Bill is inadequately titled and why it is necessary to communicate accurately to the people the contents of the Bill.
Amendment No. 2 seeks to insert in the Bill a different definition of the person who henceforward will be known as chief special collector. The amendment I tabled on Committee Stage in that regard was taken in conjunction with amendment No. 56, also tabled in my name. As I have just received the Report Stage amendments, I do not know if this amendment relates to amendment No. 56.
It relates to amendment No. 61.
Amendment No. 61 seeks to define the post of special collector as somebody who is an inspector of taxes and is so designated by the Revenue Commissioners to act in that post. Having regard to the nature of this Bill it is essential that the chief special collector and the special collectors assisting him or her ought to have the skills, training and background to enable them challenge the self-declaration facility contained in the Bill for people seeking the protection of the Bill. In other words, such people are merely asked to make a self-declaration to the effect that they have been tax cheats in the past, that they intend to amend their ways and that the money they are seeking to protect under the Act has not been involved in any criminal activity. Effectively, as the Minister conceded on Committee Stage, the special collectors or chief special collector may not challenge that declaration.
So long as tax cheats confirm they have been tax cheats in the past, that they regret it and declare they are taking back into this country so many thousands or millions of pounds, the chief special collector may not challenge that; it must be taken at face value. That is fundamentally wrong because by definition the kind of person who will seek the protection of this Act will already have lied to the Revenue Commissioners in the past, broken the law and evaded his or her proper tax liability and broken exchange controls as they existed. Despite the fact that he or she is a liar or a cheat, we are asked to accept his or her word at face value. Every test the Minister brought to bear on this on Committee Stage started from the presumption of honesty. I accept that in making laws generally that is a fair presumption from which to approach a matter. However, in this case we are making laws for law breakers and that presumption cannot hold. Instead, there ought to be a presumption that such people are not telling the truth. It is wrong that the legislation should preclude the participation in this special unit of people who have the skills, training and background that makes them familiar with the kind of statement with which they will be confronted. Such people would have the skills and training to examine the statements made by the tax cheats and assess and evaluate them for veracity.
We will come later to amendments in regard to which the Minister will say that because there is an obligation to make timely returns in respect of the tax year 1992-93 it will be possible for the tax inspector to reconcile the returns of 1992-93 with the self-declaration. I do not believe that will be possible. The tax inspector will be inhibited and obstructed in doing that because the special collector will have given the tax cheat a certificate, on production of which the tax inspector must be called off. That is why I am moving this amendment. If we are to put this legislation in place it is important that the person to whom the confession is made is in a position to evaluate the validity of that statement. I do not think that anybody outside the ranks of tax inspectors could possibly know what weight to attach to a statement by a tax cheat.
In section 3 of the Act there is a provision relating to corporation profits tax which was abolished in 1976. It therefore appears the expectation is that some people will go back to 1976 and beyond. It seems a fantastic proposition that somebody who has lied and cheated his way through the tax laws since 1976 or before that can now expect to have his statement taken at face value. It makes a laugh of the law. What we are engaged in here is humbug, making law for people who have spent their lives breaking the law and obliging the rest of the tax compliant citizens to carry the cost of the State's social services on their backs. Just because these tax cheats are powerful people who, presumably, have the ear of powerful people, we are now expected to enact legislation that gives them carte blanche to do as they please and treat them as people who would never go out of their way to tell another lie.
This Bill received a rigorous analysis on Committee Stage and we clearly exposed major flaws in it. The biggest flaw is that the so-called incentive amnesty relies totally on self-declaration.
Deputy Rabbitte said that the only thing we know about the people in this secrecy deal is that they have a track record of being dishonest. However, every condition we laid down to make these self-declarations believable has been rejected by the Minister. These conditions included a requirement for documentary evidence in relation to a total and full declaration of earnings, that audited accounts be produced and that the number of years represented by each declaration be specified as opposed to not stating a specified period. To get this black certificate they would also have to make a declaration to the Garda Síochána that there was no illegality pertaining to the source of their earnings. The Minister discarded all the safeguards we sought to give some respectability to this measure. The Minister has sought, in a grubby way, to maximise revenue and disclosure in an effort to shore up the 1994 public finances.
I do not believe that these people should be indemnified against the audit process. It is quite ridiculous that when they have signed up in Dublin Castle, declared a certain figure to be the total sum of their earnings and that it is not from an illegal source, they cannot be refused the certificate. People will underdeclare their earnings and what is even more farcical is that the rest of the Revenue Commissioners will not know who has these black certificates. This means that the Minister's total reliance on 1992-93 returns to ensure compliance is not feasible.
I agree with Deputy Rabbitte that the people in this special unit should not only be of the rank of inspector of taxes but from the Investigation Unit. They should be chosen from among the 600 people lined up to do revenue audits this year and who will now be put in quarantine because the whole audit process will have to cease. The arguments put forward by the Minister on Committee Stage were singularily unconvincing. People who defaulted will be able to specify an amount which they believe to be reasonable. The only conclusion to which ordinary taxpayers can come is that the tax evaders will pay as they please while they have to pay as they earn, which is patently unfair. I will, therefore, support amendment No. 1.
The other amnesty deals with interest and penalties for which there is a precedent in the five previous amnesties since 1932. There is some basis in law for mitigating interest and penalties but there has never been an amnesty whereby, no matter what tax was owed, it was written off.
A number of queries were put to me over the weekend. Anonymous callers from the Border counties told me that they had just come through the audit process and were psychologically traumatised by it. They had settled for a six figure sum and wondered if there was any way they could have some of the benefits of this amnesty. Unfortunately I had to tell them the bad news, that this amnesty does not apply to those who have been exposed to the rigours of an audit. I was also contacted by people who were under the impression that if they brought home £100,000 they would have to pay only £15,000. There is a gross misunderstanding about this. It is not a tax on residual cash; it is only a write down of income tax and profits tax to 15 per cent, the full VAT must be paid.
That brings me to the next most important reason I support this amendment. Let us take the example of a shopkeeper, say a draper from Tallaght, who comes forward and declares £87,000 and offers to pay 15 per cent of it. He may not realise that he has suppressed sales of VAT and that he must pay it at different rates, we all know sports goods are charged one rate of VAT, childrens' clothing at another rate, etc. How is he to recollect which rate is applicable to what? He would need someone with the expertise this amendment specifies to know exactly how much he should pay under the amnesty because he has to discharge the full VAT arrears that have been disclosed as well as 15 per cent on the earnings. People may think they will get away with paying only 15 per cent when in fact they will have to pay a much higher amount of tax. Therefore, the four or five people the Minister lined up should be from the Revenue Commissioners and able to agree the figures with the taxpayer so that the Minister and the taxpayer will know that he has reached the end of his liability and can truly get his affairs up-to-date.
I am pleased to support Deputy Rabbitte's amendment which was discussed at some length on Committee Stage. This amendment helps anticipate the core of this debate. The many amendments on Report Stage will enable us examine the multi-layered nature of this legislation. By dealing with the legislation section by section and not considering the total package we may fail to see how odious and corrupt this Bill is. Deputy Rabbitte's amendment seeks to provide that professionally competent people be appointed to oversee this amnesty and be given power to ask questions. Corruption is being effectively legalised. This is perverse legislation. It provides that tax avoidance gains, which are lawful whatever about being ethical, are unlawful under the amnesty, but that evasion which is illegal is lawful under the amnesty. Lawfulness and illegality are determined by what a person may say is an "Alice in Wonderland" approach to this legislation and that is how this will operate.
If Deputy Rabbitte's amendment is rejected, someone who has consistently cheated the system and evaded tax will be offered a bargain-basement write-off in respect of all liabilities up to 5 April 1991. If such a person makes a declaration it cannot be questioned. It must be accepted and without any discretion converted by a special collector into a certificate for the payment of the 15 per cent tax. Such a certificate is one of virtual absolute tax immunity. The Minister today and on Committee Stage stated that this is not an absolute tax immunity, but is conditional on the completion of the 1992-93 tax form. He said that was not cheating.
The only information the Revenue will have on a tax evader in respect of 1992-93 tax returns will be whatever details a tax liar, cheat or dodger submits on a tax declaration form. I do not understand how the Revenue, who are ignorant of a tax evader's affairs up to 5 April 1991, will become omniscient in regard to his or her 1992-93 tax declaration and, therefore will be able to investigate a tax evader's affairs. That defies logic.
The Revenue are clearly not up to the task because information is the key to tax evasion. The tax cheat and not the Revenue has access to that information. The information will be the key to securing a certificate of immunity. If a special collector, or the chief special collector referred to in the amendment, issues a certificate to an errant taxpayer or an evader that person may produce the certificate of immunity to a tax inspector.
Section 5 provides that forthwith a tax inspector shall cease an investigation unless he or she can establish with an appeals commissioner that he or she has grounds to show that the person who made the declaration was grossly in error. What grounds should such a tax inspector have? The tax file in respect of that person will contain a blank sheet. The only information in that file will be the 1992-93 tax return completed by the defaulter. It is illogical to say that in practice the Revenue will investigate everyone who completes this declaration. Positive proof of this may be found in section 7. The ultimate perversity of this may be seen in that section which states that the person who has consistently evaded, dodged and cheated on his or her tax liability may claim an amnesty under section 2 and get a certificate of immunity which is virtually absolute under section 5.
The public servant to whom the declaration is given and to whom the money is paid may have to pay a fine. That public servant is not trusted by the Government or the Minister to carry out his or her functions under the law. He or she may be fined for breaches of confidentiality. There is no precedent for a Minister, on behalf of the Government, to suggest that public servants should not be trusted to implement what will be the law of the land perverse as that law will be. This position reflects an extraordinary lack of trust.
On Committee Stage I appealed to the Minister to withdraw that odious section which provides for the imposition of a fine on his public servants who contravene the declaration of confidentiality. That is an extraordinary perversion of the ordinary due process of the public service and of law.
Deputy Rabbitte's amendment attempts to provide that the operation of an amnesty should not be so wide in its remit and take account of pertinent details. If I wished to avail of this amnesty and was the greatest crook in shoe leather but made a declaration that income I am declaring is my evaded income of the past that cannot be challenged. Under this Bill I cannot be questioned. I can be asked to complete a form. I may have been a cheat and obtained the money illegally but the Revenue must take my word in regard to where I obtained those earnings.
This foul Bill legislates for corruption and introduces fines on public servants who may be assiduous in their duties. The Minister has gone so far to guarantee confidentiality that he will fine his own public servants. That proves to me that the overall concern in this legislation is to produce a charter for tax dodgers so that they can be assured that unless they are stupid in regard to their future income declarations they can be guaranteed a write-off of 15 per cent under this nod and wink legislation. This is disgraceful, unprincipled and unethical legislation which for the first time elevates the tax cheats and dodgers to a status where they are rewarded. It provides that if public servants are in breach of confidentiality the law will come down on them like a ton of bricks and that is a disgrace.
If this legislation provides for a bargain basement tax write-off rate, which I object to in principle, the least that should be demanded is some documentary account of where people obtained funds. We should learn something from such tax evasion. The special collectors will not be permitted to report any new tax dodges to the Revenue because they are not allowed to ask the self-declared tax cheats how they evaded tax. They must swear an oath to hear no evil, see no evil and speak no evil because they must solemnly swear that any information they acquire or have access to in the course of discharging special collection functions shall be kept totally confidential. We are opening up an exclusive club where special collectors can talk to each other. This club is small and elitist in the sense of the numbers involved and it is much more exclusive than the K Club.
If these special collectors talk to anybody else they are liable, under this oath, to be fined. They cannot even say to their colleagues in Revenue, "We cannot give you the details in regard to Sheets A-Z but we can tell you some of the interesting ruses that these people use". That cannot be done because of the declaration clause that is included in the Bill which simply says that the forms must be completed as required, declare that the money was not obtained illegally and no more. A certificate of immunity then ensues and despite what has been said about apprehending these people at a later date that will not happen. Deputy Rabbitte's amendment is perfectly justified. We should get these people into the net to learn what we can about their methods of tax evasion and not treat them with kid gloves. They have behaved disgracefully in terms of their social responsibility and I hope, even at this late stage, the Minister will see sense and take on board the need for some accountability.
I do not wish to delay the proceedings much longer as I know my colleagues wish to debate other issues. However, I have not had an opportunity to speak about this Bill. I do not intend making a Second Stage speech now but I wish to echo what Deputy Cox said. This is vile, base, disgraceful and corrupt legislation. It reflects badly on this House that we are passing it, it reflects extremely badly on the Minister that he is sponsoring it and it reflects even more on this Government that it would countenance it.
Deputy Rabbitte's amendment is the litmus test of how disgraceful this legislation is. If the methodology of corruption and tax evasion is to be kept a matter of secrecy then, as Deputy Cox said, we are not even learning from our errors by this measure. If people are sworn to secrecy even as to the identity of the people involved, which might give some clue as to what they were doing and if, in turn, the special collector of taxes is prevented by law from making an inquiry as to precisely how the criminal act of evasion took place, how can we say that this Parliament is upholding the law in so far as we then enact legislation to keep secret from those to whom we entrust the care and maintenance of the Revenue's information which ought to be in the hands of the State as to how that system is failing and as to how corrupt people are circumventing it? We cannot say that we are upholding the law and this Minister is spitting in the face of the Revenue Commissioners, its staff, its standards and its ambitions to conserve our revenues by asking it to participate in this grubby exercise.
If Deputy Rabbitte's amendment was accepted it would open the window slightly into this horrible mess of corruption and would perhaps enable the Revenue Commissioners to learn from experience how people evaded the system with a view to preventing them from doing it again. But because of this iron wall of secrecy around the system the very learning process which Deputy Cox mentioned, and which Deputy Rabbitte's amendment is designed to sustain, is prevented. In its place is an absolute immunity for criminals. I believe the Minister shares their criminal responsibility by retrospectively ordaining that, effectively, it is to go unpunished. Every Deputy who votes for this measure and who rejects these kinds of amendments put forward by the Opposition shares in the crime, shares in the vice that lay behind the crime and takes upon himself the standards that are involved.
The Deputy will agree that criminality should not be applied to any Member of this House.
They share in the criminality.
I see it as a political charge but the Deputy should be careful not to attribute it to any particular Member of this House.
If, say, an amnesty Act in another political context, was passed by this House it would be most peculiar, if Members of the Opposition would be curtailed by the Chair in any way from saying that the majority who want to absolve criminals of their acts do not share in the responsibility for the criminal acts which they allow to go unpunished. I do not believe I am using unparliamentary language. I am simply pointing out the plain truth to the Members of the House.
To attribute criminality to any Member of this House is not in order.
I am simply saying that those who intend to vote on this matter share in the criminality and let us see them by their act. If they go through the Tá lobbies at the end of this debate by their own act they will be sharing the standards of the people they are protecting.
The Deputy should not quibble about the matter.
By failing to accept Deputy Rabbitte's amendment the Minister is loading the scales against this Bill when it comes before the courts. I hope this measure is cast down by the courts when it comes before them for adjudication. By brazenly refusing to allow the Revenue — and doubtless these points will be made before a court when the time comes — to know even the methodology of criminality which is being absolved by this Act, the Minister is adding further to the unconstitutionality of this measure. Although the measure has been widened since it was originally announced, I adhere to the point I made at the outset namely, that it amounts to an arbitrary, invidious discrimination against compliant taxpayers and this rejection of Deputy Rabbitte's amendment adds to that point.
The whole tenure and complexion of the provisions are so fraught with an absolution of corruption that I believe the courts of this land, when the matter comes before them, will turn it down. Obviously, every Member of this House is entitled to his or her own view about the constitutionality of this matter but in my view it is unconstitutional. I hope I am right when the matter comes to be proven. I hope that this measure is cast down and I hope the courts vindicate standards which apparently the Government of this country is unwilling to do.
There is a proviso in section 7 of the Bill which states that the Revenue Commissioners are entitled to revoke the nomination of special collectors but where they revoke the nomination of the person who is chief special collector, they have to nominate a chief special collector in his place. This is in case the Revenue Commissioners might have rush of blood to the head and refuse to operate the scheme by failing to nominate a successor where they revoke one person's appointment. If one examines this provisio, a duty is cast on the Revenue Commissioners to appoint someone to do this nefarious act even if they were minded not to do so themselves. In another context Deputy Cox has pointed out to me that there is a childlike mistake in this Bill, for which Deputy Cox will receive the credit later, in relation to another aspect of enforcement and anti-evasion which shows that this Bill has been put together in haste and that it has not been well considered.
I ask the Minister, even at this eleventh hour, to accept what Deputy Rabbitte is putting forward as a reasonable amendment, to withdraw from this Bill some of its most obnoxious qualities or, alternatively, leave these obnoxious qualities in the Bill so that the courts can do the leagues in Government should have done a long time ago.
One of the essential aspects of financial matters is confidentiality. It was on that basis that people, who avoided paying tax when tax was 70p in the pound and when we in Opposition said the amount of tax was penal and a disincentive, invested their money in areas where there was total confidentiality. In order to ensure that the money is returned a similar level of confidentiality must apply in this case. One would be foolish to think there are no bank accounts held confidentially that are not strictly within the law. I am somewhat amused by Deputy McDowell's comment about criminality among Members of the House. Do his comments apply equally to the legal profession who plead the innocence of somebody in court only to find afterwards that the person is guilty? Confidentiality is essential for the success of this amnesty.
Following a very detailed Committee Stage, Opposition spokespersons are broadening the issue on Report Stage, but I will try not to delay too long on the matter. As regards Deputy Rabbitte's amendment, inspectors of taxes are not excluded from becoming special collectors since they too are officers of the Revenue Commissioners. Presumably Deputy Rabbitte intends that the special collection office should be staffed by inspectors so that they can examine and investigate whether complete declarations of undisclosed income and gains are made by individuals availing of the amnesty.
It will not be the task of the special collectors to examine and investigate cases. I accept that some Deputies would like modern Ireland to be different. They have difficulty in believing, at least under this section, that there are thousands of people who for many years have had undisclosed tax liabilities. Perhaps when dealing with later sections their views may change. Deputies have had more briefings on collectors than I have had. There are thousands of individuals outside the system who are not known to Revenue, who are holding back at least part of their taxes on an annual basis and have done so for several years. Many of these people ignored the 1988 amnesty and will take the opportunity of availing of this amnesty. Alternatively, they will continue to remain outside the system.
Special collectors will receive declarations and admittances and will issue certificates. They are specifically nominated to provide a confidential collection service. If we do not ensure confidentiality, as was proven in 1988, individuals will not use this amnesty. Individuals with undisclosed liabilities, not only on income tax but all taxes, whether it be capital gains, VAT, PAYE, CAT, surtax, stamp duties or corporation tax, will ignore the amnesty and remain outside the law, as they have done for years, if we do not ensure confidentiality. One matter that has been established in debates on this matter is that there are thousands of people with undisclosed liabilities who are known to banks and financial institutions. Banks fear that if I were to follow the laws of the United Kingdom, America or other European countries, we would lose all the money in reserve — figures were quoted as to the amounts that might be lost if these rogues are not brought into the net. In these circumstances interest rates would zoom and great difficulties would arise.
Special collectors will not examine or investigate cases. Confidentiality is essential for the success of the incentive amnesty. It will help to maximise tax revenue which would never be collected otherwise. I have a greater doubt now than I had five or six weeks ago whether there is a will in my political party to follow these rogues. All parties in Opposition believe that non-compliant taxpayers are part of the make-up of the country.
That is less than fair.
Deputies criticise these people and talk about the lady in Connemara——
That reference was made by Deputy O'Keeffe, a Government backbencher.
——but whether they are interested in ensuring that this is a compliant society, I have grave doubts.
It is the Minister who is introducing the cheat's charter.
To ensure that Deputy Cox is absolutely happy, I have an amendment down which proposes to remove the fine.
I am extremely pleased and I welcome that amendment. It was an appalling error in the Bill.
What convinced me was Deputy Rabbitte's reading of the letter written by Deputy McDowell's colleague in the Law Library stating that I should double the fine.
The Law Society has nothing to do with the Law Library.
The Deputy's colleagues.
They are not my colleagues.
If the Law Society are not the Deputy's colleagues I accept that.
That is not a good reason for action.
When Deputy Rabbitte read out the letter stating that I should double the fine, I started to believe that I may have got the section wrong. I reexamined the matter and, in line with Deputy Cox's suggestion, introduced an amendment in that regard.
In regard to the declarations, Deputies asked what would happen in terms of the absolute immunity. There is no absolute immunity. The declaration must be full and complete. It must be accurate and must indicate that the income or gains are not received from an illegal source or activity. There is no immunity whatsoever from investigation by the Revenue Commissioners of the 1992 certificate. A non-compliant individual with liabilities pre-April 1991 presents himself or herself, or their adviser, to the special collection office and in the case of income tax and capital gains tax 15 per cent interest is paid. In the case of VAT the rate is 100 per cent and the money is paid to the special collection unit. All other taxes are paid to Revenue in the normal way. In the case of others taxes such as PAYE, CAT, stamp duty and residential property tax, excluding PRSI the full 100 per cent is paid to Revenue in the normal way and interest is not paid on penalties.
In addition, before 31 January 1994 the 1992-93 tax form must be completed. If people were never in the system that will give an audit trail to Revenue for the first time. There is no immunity from investigation of the 1992-93 tax form which must be filled in before anyone can benefit under the incentive amnesty. If the inspector establishes — I hope this will not have to be established because people who use this amnesty will be those who decide it is time to abide by the law — substantial capital income in 1992-93, the taxpayer will have to be sure his declaration is correct. Otherwise the inspector will work back from 1992/1993 to catch the taxpayer abusing the amnesty. There can be no case for a VAT write down as after all it is the customer's tax and it must be taken correctly. The Government has taken the view that the fiduciary taxes must be paid in full.
If an individual was not previously known to the Revenue, that is its starting point. The knowledge represents progress and there is now a trail for audit purposes. I was asked about the audit cases excluded from the amnesty. The amnesty is an incentive to individuals to bring their tax up to date by making a declaration of previously undeclared income and gains and paying tax on that income. Cases subject to audit are those in which the inspector of taxes has begun — or is about to begin — an audit or investigation designed to unearth any tax evasion by the taxpayer. Where such evasion is unearthed by investigation it is not appropriate that the taxpayer should be allowed to settle his affairs by paying reduced amounts. As the House will recall, the areas excluded are agreed with the inspector but not paid. Decrees with the sheriff for collection, applications for attachment or under appeal with solicitors must be paid in full to the Revenue. People will gain the benefit of not paying interest on penalties but will have to pay the full amounts.
To achieve the objective of obtaining some of the tax yields, section 2 excluded from the scope of the 15 per cent charge any tax not paid by virtue of the tax avoidance schemes. The reason for this exclusion is that the funds covered by the schemes are already in the tax net and the question of whether any tax falls to be paid on these funds depends on whether the tax avoidance scheme succeeds. By using tax avoidance schemes the taxpayer is in effect declaring that his income or capital gains would otherwise be taxable. These funds are, therefore, in a very different category from funds that have never been declared.
The need for the office of the chief special collector to continue indefinitely is to ensure that somebody is always in a position to validate the amnesty certificates.
Why does the Minister have to force the Revenue to appoint them?
If the facility did not remain there would be fertile ground for the production of forged amnesty certificates in future.
Why does the Minister have to force the Revenue Commissioners to reappoint somebody?
This is not Committee Stage.
Deputy McDowell will accept that some individual must be kept there because the 1922-1993 tax law is not "once off." It can be used for many years to come.
A number of times on Committee Stage and just now the Minister made the point that there is no absolute immunity. Then he went on to say, in an unforgettable phrase, that it is "absolutely conditional." It reminded me of Deputy Brian Lenihan's famous remark about the "futility of consistency." It is neither true nor accurate returns. Section 4, to which the Minister referred, withdraws the benefit of the amnesty either under section 2 or section 3 of the Bill from people who do not duly deliver a return of income on or before the specified date in relation to that return. They are required to make a timely return but it does not say anything anywhere about an obligation to make an accurate return. It would not be possible to know whether it is accurate, so they are required to make a return.
One will not know who has a certificate.
Of course. We should not persist in a sterile argument. I know my colleagues are anxious to discuss other important matters in this Bill and, as Deputy Cox said, it is almost impossible not to broaden the issue because it does not make any sense in isolation. The Minister said — almost as if it was something about which we should be relieved — that it is not the role of the special collector to investigate or probe, merely to receive declarations. That is the whole point of my amendment. Even if one holds Deputy Davern's views about the merits of the amnesty, I do not know how it will offend his position to have somebody reasonably well informed receiving these taxpayers. In other words, we should have the skills and training of the tax inspector so that at least he can spot a major criminal, for example, by virtue of the statement he makes. Under the system as it operates, unless the taxpayer is wearing very gaudy Mickey Mouse underpants the special collector would not know the situation from Adam. I cannot see how the Minister can make that out to be a benefit. I will quote a paragraph from the statement from IMPACT, which represents tax inspectors. It is surely one of the marvellously positive things about the public service that although all the estimable gentlemen at the right hand of the Minister disagree fundamentally with what he is doing, as I do, they will nonetheless ply him liberally with notes on the correct position on various things. However, their union speaks for them, and on this point it said:
The whole concept of a Special Collector is designed to ensure that the left hand will not know what the right hand is doing. At best this will be an administrative nightmare. At worst it will provide immunity from audit for anyone who makes a half baked disclosure. All intending tax cheats would be well advised to make a small disclosure, get his certificate from the special collector and thumb his nose at the Tax Inspector or indeed the Collector General when they seek to collect the proper taxes. The penalty provisions in Section 9 can have no "bite" if the Inspector is deliberately kept in the dark and prevented from making inquiries.
That is the situation in a nutshell. The same statement also said, giving the Minister's view:
The legislation provides that an Inspector will be free to re-examine the case where he has reasonable grounds for believing that the declaration to the Special Collector is not a full disclosure.
The tax inspectors say:
This is circumvented in a number of ways.
1. The inspector can be prevented from commencing the investigation by the production of a receipt from the Special Collector.
If one produces this badge of dishonour, the tax inspector may go no further.
2. If however the Inspector has managed to commence the investigation without the tax cheat's knowledge, the investigation can be stopped by applying to the Appeal Commissioners and requiring the Inspector to provide evidence that the declaration to the Special Collector was not a full declaration. Since the Inspector is legally prevented from accessing the information which the Special Collector was given it is impossible to establish that it was incorrect in the first place.
One cannot produce evidence before the appeals commissioner.
3. The information provided on receipt from the Special Collector cannot assist the Inspector as it can cover several years and does not indicate the commencement year.
It is absolute immunity, contrary to what the Minister says except perhaps where some bigtime tax cheat is stupid enough to trip himself up. We dealt with this matter on Committee Stage but I do not think that somebody in this league who can pay for the best tax advice in the city is likely to make returns in respect of the year 1992-93 that will not reconcile with the self-declaration he has made in the first instance.
Deputy McDowell made the important point that because there will be absolute secrecy we will be prevented from learning anything about the methodology used in tax evasion. As I put it on Committee Stage the special collector may not utter in his or her sleep what he or she has discovered on a particular day because they could be open to a penalty. It is farcical that the special collector is open to a penalty——
We dealt with that matter on amendment No. 1.
We will have to rewrite our scripts.
I came from another meeting. It is a big breakthrough if special collectors will not be put in prison or fined for doing their job, but it does not change the tenor of this legislation.
This is a no questions asked amnesty. If the Minister is serious about imposing no bar on tax inspectors, all he has to do is accept this amendment. He knows as well as I do that there is a bar, they will not be drawn from the ranks of tax inspectors. He admitted on Committee Stage that there was a rumour or a push to have it contracted outside the Revenue Commissioners entirely. Even if one accepts Deputy Davern's point of view about the necessity for confidentiality — I understood that the Revenue Commissioners operated on that basis — I think this is unnecessary. The litmus test is whether the Minister accepts it.
Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.
We now proceed to amendment No. 3 in the name of Deputy Rabbitte. Amendments Nos. 5, 7 and 73 are related, while amendment No. 6 is an alternative to amendment No. 5. I suggest therefore that we discuss amendments Nos. 3, 5, 6, 7 and 73 together. Is that satisfactory? Agreed.
I move amendment No. 3:
In page 3, between lines 32 and 33, to insert the following:
"individual", other than an individual who was a beneficiary of section 72 of the Finance Act, 1988, has the remeaning assigned to it by section 2 (2);.
In this amendment I seek to preclude those individuals who benefited under the 1988 amnesty. The only distinction between amendment No. 3 and amendment No. 5, which relates to persons, is that the definition in amendment No. 5 is taken from section 3 which deals with the general amnesty and in which an array of taxes, including corporation tax, is listed in addition to the taxes covered by the main amnesty. People may benefit from both. I seek to preclude those who benefited under the 1988 amnesty.
If the Minister is serious about attempting to introduce a tax compliant culture then the last thing he should contemplate is sending out signals or making a positive declaration by way of enacting a law, that if a person will not benefit under this amnesty there will be another one around the corner, or even if they will benefit they should hold out, keep the Revenue Commissioners at bay and there will be another amnesty under which they can benefit a second time. The purpose of this amendment is to prevent this recurring amnesty culture, which is an appalling vista for those who attempt to pay their lawful taxes or those who do not have any choice, as in the case of the PAYE sector who have their taxes deducted each week. As Deputy Davern has said, the tax system has been punitive in the extreme in the past for those citizens in the tax net who are paying their lawful taxes. It has been an inordinate burden on them.
We are now saying that there are two sets of tax laws. There is one set for those who have no way of avoiding their taxes because they are deducted from their cheque each week, or for a self-employed person who is struggling to keep his taxes up to date; but there is a different set for those who can afford to pay for good advice and to keep the Revenue Commissioners at bay. They will benefit. In the case of the main amnesty all they will have to pay is 15 per cent and all their past sins will be forgiven.
This is what I call the Tallaght bus amnesty. We might not know when the next one is coming, but as sure as you are sitting there, a Cheann Comhairle, it will come and all that those on the inside track, who have the ear of powerful people and have inside information, have to do is keep the Revenue Commissioners at bay and at the stroke of a pen they will get away virtually scot free. Deputy Yates mentioned that the people who contacted him over the weekend are very sore given that they have had their full liabilities squeezed out of them in recent months, presumably with penalties, and now they find at the toss of a coin they are on the wrong side of the magic date of 25 May with the result that they are caught.
The final and most important point I wish to make in favour of the amendment to prevent those who benefited in 1988 from benefiting again is that the Minister himself has claimed that these people are already in the tax net. There are two categories: the main amnesty and the general amnesty. In the case of the general amnesty they are already in the tax net. If they are already in the tax net the Minister has the machinery available to him to go after them and get the taxes they owe to the State. On Second Stage the Minister said in respect of the 1988 amnesty:
New tax head records were set up in no more than 1,000 cases and of those who availed only 366 individual taxpayers and 13 companies were not previously recorded by Revenue under any tax head. To put these figures in perspective, while an exact figure for the number of taxpayers who availed of the 1988 scheme cannot be derived there were some 170,000 inquiries to Revenue about that scheme and the number of payments received by the Collector General in that year was some 357,000 more than in 1987.
The point the Minister was making was that we should look at those fantastic figures — 170,000 inquiries and an extra 357,000 payments — yet only 13 companies and 366 individuals were not in the tax net. That is most extraordinary having regard to the fact that they contributed more than £500 million. If these people are already in the tax net why do we need to persist and allow them benefit under an amnesty again?
Taxpaying citizens, whether they are in business or just as individuals, are surely asking, "Why should we bother paying our taxes for the next four or five years when, with any bit of luck, money will be badly needed after the next general election to do all the things those who support Deputy Davern's side of the argument say need to be done, and there will be another amnesty?" We cannot continue to operate one law for the rich and another law for the remainder of income earners. If we continue to wipe out with the stroke of a pen the taxes owed by the rich and powerful we will produce a reaction from people who are crippled by tax.
The arguments advanced by Deputy Rabbitte are the reason for introducing this amnesty — some non-complaint taxpayers outside the net did not take up the 1988 amnesty. We are trying to get these people into the net. These non-compliant taxpayers outside the net — it is clear that they exist — did not avail of the 1988 amnesty——
It is the main argument against section 3.
No. These non-compliant taxpayers are not in the system, and we will have to wait to see if this amnesty will bring them into it.
My amendment No. 7 also proposes that those who availed of the 1988 amnesty should not have the benefit of his amnesty. Apropos the Minister's remarks, I do not believe that there are very large numbers of people completely outside the system. On Committee Stage I outlined a number of examples of evasion which I had come across, for example, invoices from Luxembourg, fictitious accounts for non-existent management services and export contracts to the UK for which a sum was deposited in a UK bank account. People involved in this sort of evasion are already in the tax net. I do not believe a person can live in this country without having an RSI number of some description. I do not believe there are people living in this country who have totally escaped the tax system. What we have is an underdisclosure of tax by tax evaders. In other words, they will tell you some of the story but they will not tell you all of it. I will be very surprised if more than 1,000 people — the Paddy Murphys about whom the Revenue Commissioners have never heard tell before — are brought into the system under this amnesty. It is interesting that the Minister has not given any forecasts of the yield from this amnesty. He is being very coy about this.
So would the Deputy be if he was in my position.
I think the MacSharry amnesty yielded £540 million. On that basis, this amnesty could yield £300 million——
I think approximately £100 million of the money brought in under the MacSharry amnesty was by way of follow-up — the amount brought in was approximately £400 million.
The injustice of this amnesty is quite clear.
The amount was much higher. The amount brought in in 1988 was higher than the amount brought in in 1987, while the amount brought in in 1989 was lower. Much of this money was tax brought forward — it was much more than £100 million.
In other words, people went into the bank and borrowed money so that they could have their tax affairs brought up to date.
They did this to avoid penalties.
One of the injustices of this amnesty is that anyone who has ever paid interest or penalties will now feel like a sucker because if he had ignored the demands from the Collector General's office or the sheriff he could now pay the full amount without any interest or penalty. We all know many people in our constituencies who make a down payment and have a post-dated cheque arrangement. Those people are now being made to look very foolish.
The very minimum the Minister should do is ensure that the people who availed of the 1988 amnesty and who have probably been waiting for this bus to come along should not have the benefit of this amnesty. On Committee Stage I outlined a case involving a company which in late 1988 had to borrow £20,000 to pay what it owed. The owners sweated blood and tears trying to keep their company afloat. They hoped they would get a refund under this amnesty of the interest on the penalties. However, they will get no refund at all. There is a popular myth that we dealt with all the amendments on Committee Stage.
It was the leader of the Deputy's party who said that.
We did not deal with three of my amendments.
That is more than 10 per cent.
It would have been a help if Deputy Davern had been present to debate the amendments on Committee Stage — the fruits of his labour have meant that we have had to work very hard for the past week while, I think, he was in sunnier climates. In view of the number of amendments which were accepted, we might have profited more from being in sunnier climates. The Deputy was missed particularly during the debate on hare coursing in Priavte Members' time, not to mention other legislation which no doubt we will come to again. That legislation was rushed through in the Deputy's absence.
Anyone who avails of the interest amnesty should be obliged to fill in a direct debit form for the future. If this had been done under the previous amnesty it would have put a stop to those people who have cash flow problems and habitually pay their tax late; they do everything possible not to pay on time. Unfortunately we did not get an opportunity to debate my amendment on Committee Stage. My amendment No. 42 which is similar, is reasonable. The Minster could do this by way of administrative order. He said this morning that the Revenue Commissioners had to approve particular cases involving access to bank accounts. I think the Minister has made 14 statements in recent months welcoming the consecutive cuts in interest rates.
Only the first one was regarded as important.
The Minister seems to get coverage on the news bulletins every Friday night.
When the interest rates go up I get hours of coverage.
At a meeting last night a farmer asked why the interest rate on his overdraft was 13.5 per cent instead of 6.5 per cent.
I hope the Deputy advised him that the maximum rate is 12 per cent.
The point I am making is that the rate of interest payable on late tax is 1.25 per cent per month or 15 per cent per annum. This is totally out of line with the current AAA rate, AA rate or A rate. In view of the fact that he was prepared to write it off in 1988 and 1993, the Minister should do the decent thing and make the rate of interest reviewable every six months or every month with some commercial rate the double A rate or whatever. It is very unfair to treat one group so savagely and another group so leniently.
It has come to my attention that all is not as it should be or might be in terms of efficiency in the Collector General's office. I have received complaints about this office from both within and without, so to speak. Even inspectors of taxes are very frustrated about the inefficiency of that office. This inefficiency is one of the reasons people fall behind in paying their taxes.
People who availed of the 1988 amnesty did well; they did much better than those who paid interest charges before and after 1988. There is no way that these people should be able to benefit from another amnesty. My amendment is reasonable.
The Ceann Comhairle said that amendments Nos. 3, 5, 7 and 73 were related. However, my amendment No. 73 is related to amendment No. 6.
There are five amendments grouped together — Nos. 3, 5, 6, 7 and 73.
I will deal with amendments Nos. 6 and 73 presently. I supported amendments Nos. 3, 5 and 7 at length on Committee Stage and I do not see the need to repeat the arguments now except to say that if we allow people who availed of the amnesty in 1988 to avail again of this amnesty there is no clearer way of underwriting and creating an amnesty culture in the minds of taxpayers. That is the phrase I used on Committee Stage and to my mind it is the key phrase. What we are allowing for is recidivism — to use the kind of jargon applied to people in prison — those in trouble use an amnesty but, like habitual offenders, they start off again and use another amnesty. These recidivists should not be allowed double amnesties because it creates the expectation that an amnesty will be available to them. More than anything else, the inclusion of people in this amnesty who availed already of a previous amnesty and who as a result are known to the tax authorities is the most invidious discrimination against the compliant taxpayers. Now people who have been doubly non-compliant get a double bonus and those cited by Deputy Yates end up with a penalty. That kind of amnesty recidivism should be outlawed and for that reason I support these amendments.
In your absence, a Leas-Cheann Comhairle, one of my colleagues, Deputy Michael McDowell, suggested that the Minister and others who voted for this, shared criminal responsibility for criminal acts. However, if the Minister finds himself in Mountjoy I hope he will get a day's parole to go to the Leinster senior football final, as it would be a great pity if he were to miss one of his favourite leisure pursuits.
They have telly in Mountjoy.
They do, or they might give the Minister a room with a view, an elevated spot from which to peer into Croke Park.
The GAA are asking RTE for too much money to relay it live.
The Minister in his response to the last set of amendments talked about special collectors. Even if these are not Revenue staff in the ordinary sense with collection skills, as Deputy Rabbitte suggested, it really would not matter what skills they had because the special collector is like a receptacle, a letterbox of sorts, into which you put your declaration duly filled out and to whom you remit a cheque by the due date. It seems to me that the special collection process is essentially that. On that basis I could recommend for the job someone who is perfectly qualified, given that it is not going to strain their means. The Minister may recall that one of the characters in Myles na gCopaleen's writing about "the Brother" was his dog, Eugene. In one episode he writes that the dog was taken up to the Park one day to be interviewed by a Sergeant Kissane for a job as a Garda inspector, informant and tout. His key qualification, according to the Brother, was that the dog Eugene was an iron disciplinarian, just like the Brother himself. It seems to me that Eugene, the Brother's dog, would be a perfectly qualified candidate for the special collector role, because the dog could ask a set of questions of the people who make the declarations just as articulate as the special collectors themselves.
Provided he had a muzzle.
He should have to wear a muzzle, even if he was not a coursing dog, on the grounds that he could neither bark nor bite on the occasion. If the Brother's dog is still about I think he might be interviewed by Sergeant Kissane or someone else for appointment as a special collector.
Amendments Nos. 6 and 73 relate to a point I dealt with at length this morning and I will deal with it more briefly now. These amendments deal with resident and non-resident accounts and the powers that exist further on in the Bill for the Revenue authorities in the normal course of events to look for the right of review of bank accounts for periods not exceeding ten years. I expressed the fear that because of the way the law is defined under the relevant legislation, which goes back to section 18 of the Finance Act, 1983, the only accounts that could be looked at were the bona fide accounts held by persons and that the non-resident accounts could not be looked at. Rather than rehearse all the arguments again, let me say that the Minister pointed out that, under section 13 (2) (i), bogus non-resident accounts held by persons ordinarily resident in the State could be included because of the following provision within brackets in that section: “being an account or accounts from which the person may withdraw monies”.
In drawing my attention to this, the Minister said that, effectively, it could take in a bogus non-resident account. It might be worthwhile considering a belt and braces approach to this matter. I suggested that the definition of a person in the 1983 legislation should stand save in so far as persons and amnesties are referred to in sections 2 or 3 of this Bill and that the definition should also include those holding bogus non-resident accounts. I have used more felicitous language, but that is more or less what I am getting at. The reason I make that suggestion is that I fear that the belt, which he has got, in the absence of the braces, which I am suggesting, could still allow people to slip through. For example, if I have an account and am aware that this legislation is on the way through the system, am I not in a position to put mandates on the account to the effect that this may be my account but the only person who can draw from it under mandate will be, for example, Deputy Rabbitte? Equally, Deputy Rabbitte may have an account and he might name me as the only person mandated to draw from it. But since because of the mandates neither of us was the person entitled to draw from the account of which we were the beneficial owner, I do not know if the Minister's particular prescription would include that or not. I made the issue explicit in amendments Nos. 6 and 73 and I recommend that the Minister consider a belt and braces approach.
As I understand it, the amnesty started life as a way of bringing hot money from abroad into Ireland and it then matured into bringing hot money in Ireland into the system, because possibly people may have had bogus non-resident accounts. It is important, if the amnesty relates to any such accounts, that those accounts should be subject to potential review in the future where there are reasonable grounds for such on the part of an inspector and where all the other conditions we spoke about earlier today apply. Amendment No. 75 effectively covers the same point. The Minister consistently makes the points that he is rewarding non-compliance up to 5 April 1991 with a view to encouraging better future compliance. My amendment No. 75 relates to these non-resident accounts and I suggest that, whatever about the practice that has occurred——
It is really not in order to debate that amendment at this stage. We are confined to debating the grouping agreed to, amendments Nos. 3, 5, 6, 7 and 73.
I had agreed to this at the outset, but I had to flick through pages to find out what was in amendment No. 73. On Committee Stage Amendment No. 75 was related to amendments Nos. 3 and 73. This completes the point, because it does not stand alone logically. It seems to me, whatever may have been the practice about opening a bank account to date for the future we should say, as stated in my amendment No. 75, that when opening a bank account within the State evidence should be produced of who one is, and giving one's ordinary residence. Then whatever may have happened vis-à-vis such accounts in the past, at least it would not recur in the future.
I might comment on Deputy Yates' remark that he would find it very difficult to imagine anybody in this country not having an RSI number. I do not believe that Deputy Yates is as naïve as he says he is in this respect. There are thousands of people who are not claiming unemployment benefit, dole or any sickness benefit and who do not pay any income tax. Any Member living in a rural area will know that if one goes to pay such a person for repairing, say, one's washing machine or one's car, the mention of a cheque will mean that one's floor will be left flooded or one's car flat on four wheels, so that one will never call that person again in an emergency.
I should like to see such people being brought within the system because they are making quite a good living but do not pay anything into the system. Indeed, I have endeavoured to encourage some of them to do so, for their own sake or that of their wives and children, so that, if the worst came to the worst their dependants would be catered for. There are very many people who have left their original jobs, or lived on small pensions who have vanished from the system, who just do not appear on the records. The introduction of the composite RSI number by the Department of Social Welfare two years ago was a good move because all those people will now be recorded. But the people to whom I first referred do not have bank accounts or accounts with credit unions. To all intents and purposes they do not exist with the exception of those local people who have resort to their expertise and pay them in cash. Otherwise people will not reap the benefit of their expertise in any given emergency.
I disagree with some of the comments made by Members opposite, especially those remarks about an amnesty culture having grown up amongst the self-employed. From experience of dealing with business people since 1988 I have encountered a much more responsible attitude on their part with regard to the payment of taxes, endeavouring to keep their VAT, PRSI and income tax payments up to date. A number of people who will benefit under this general amnesty, comprised mostly of smaller shopkeepers, publicans, small garage repair people, who borrowed money in 1988 in order to bring their payments up to date, discovered that with increasing interest rates and the fall-off in business generally, they got into trouble again. Even though I should prefer to see everybody pay on the due date — afterwards paying interest and/or penalties if necessary — in practice it is better to keep these people in operation rather than force them to close their businesses and have to claim social welfare benefits. It is important — and I am glad to see this happening again — that there be local collection units, with inspectors calling to business people to collect amounts due. Indeed, the practice generally in business has been that if a creditor does not come knocking on the door, he or she will be the last person to be paid. Therefore, I am glad to note Revenue adopting a new attitude to collection procedures.
Perhaps the Minister would say why a surcharge is not deemed to be a penalty. I understand that it is treated as a tax. I suppose a Senior Counsel in our midst could explain the difference between a surcharge and a penalty.
Deputy Rabbitte asked earlier why I was wrong and he was right. I want to place on the record again that section 4 (3) (a) reads:
In subsection (1) "return of income" and "specified date" have the meanings assigned to them by section 48 of the Finance Act, 1986.
I might add that "return of income" in section 48 of the Finance Act, 1986, means a return, statement, declaration or list which a person is required to deliver to the inspector by reason of a notice given by him under any one or more of the specified sections. While I do not wish to argue the point again with Deputy Rabbitte, there is a clear link between the two sections because section 4 (3) (b) reads:
(b) The provisions of subsection (1) (b) of section 48 of the Finance Act, 1986, shall apply for the purposes of subsection (1) (a) of this section as they apply for the purposes of that section.
This ensures that, in the circumstances outlined in those provisions, the fraudulent or negligent delivery of an incorrect return, failure to rectify a known error in a return which has been delivered to the inspector, and failure to respond to an inspector's inquiry in relation to a return which has been delivered to him, a person will not be regarded as having made a return of income on or before the specified date in relation to that return. In reality that is what will happen down the road, that in due course we shall all encounter people who will wonder why this linkage obtains. That is what will happen. I do not wish to go back over all the arguments which have been made.
Which subsection (1) does that relate to?
Subsection (1) (b) of section 48 of the Finance Act, 1986. The relevant section of this Bill is section 4 (3) (a).
I have section 4 (3) (a) here but which section of which Act is the subsection (1) referred to in section 4 (3) (a)? Subsection (1) of what?
Section 48 of the Finance Act, 1986. It is section 4 (3) (a) of this Bill and subsection (1) of section 48 of the Finance Act, 1986. The net effect of the provisions will be that a return of income has to be a full return. As the Deputy implied, one cannot get away by just inserting any figure willy-nilly——
Not only was I implying; I am saying that the Minister will not know, that he cannot know.
One can know because the very fact that one must complete the 1992-93 return, and if one is audited subsequently——
No, one cannot be audited because the Minister has waived the certificate.
No, one can be audited.
One can be audited only as and from 5 April 1991.
The 1992-1993 tax form can be audited and questions that arise in relation to it can go right back——
On the basis of the information supplied.
On the basis of the information being incorrect or a person finding something they want to change.
By definition, an evader so far would have given a blank sheet to Revenue. The only sheet they will have will be what he chooses to declare in 1992-93.
No accountant or other professional advisor — whatever we might say about some professional standards — will get a person to insert any old figure for the special collector for the main sum and then take a totally different line on the 1992-93 return. That is a total misconception.
The Minister is right.
That will be a different story but not a true one.
It will have to be a true story. What is given to the special collector will have to be reflected in 1992-93 because if it is subsequently audited it will show clearly what is the correct position.
Or if there are errors, at least they must be reconcilable.
Whatever about our examination here last week 14 or 15 members of the professions all picked up that point without any difficulty. As my colleague, Deputy Michael Ahern, said on Second Stage, this is what will happen and we need not worry about it.
I hope we will both be around to check that.
Clearly there are still individuals outside the net who did not take advantage of the 1988 amnesty. I agree with Deputy Yates that most of them are probably sole traders suppressing income because companies are excluded. They do not have their house in order and have remained marginally outside the system. They have a decision to make as to whether they want to get their tax affairs in order. I hope they will cease suppressing anything and get absolutely 100 per cent credit. We all want a compliance rate of nearly 100 per cent and we hope to achieve it.
I should like to deal with the questions on section 13, referred to by Deputy Cox, that an inspection of taxes may lead to the appeals commissioners having access to the bank account of a person who by definition, must be ordinarily resident in the State. When the provision was being framed consideration was given to a person making a bogus non-resident declaration where he or she has rights of access to a bank account when maybe in a non-resident's name. If you are the beneficiary and have the power to withdraw you could still be caught. We are trying to make it difficulty for people to open several accounts. Deputy Rabbitte put it well this morning when he said there is a huge fear in the country. Unfortunately the wrong people are frightened. The person who has very little finance is the one who panics.
What about the rules in future? Would you simply have to establish your bona fides?
I will examine that issue. It is a complex and difficult area and if you alter one part you can run into difficulties. The question of whether a person opening an account is a resident or a non-resident is always complex because people use other addresses. We tend to think of bank accounts as being fairly static. We think that when an account is open there will be many transactions in it over the years, this happens but it is not always the case. In particular, money deposited in this country on the money market by non-residents is often deposited for short periods and the second deposit will generally be made to a new account. It is a complex area but I will certainly look at it. In the Finance Act, 1992, I addressed a problem of requiring declarations and auditors' certificates, including the tax reference numbers for companies opening DIRT free accounts. I also introduced a significant declaration system on the opening of the special savings accounts and stringent reporting requirements on institutions and other financial intermediaries who help to open accounts abroad for Irish residents. The Department of Finance and the Revenue informed the banks and building societies that if there is evidence of inadequate care in policing the new system they will take the necessary legislative or administrative action.
I was responsible for introducing the Payment of Wages Act. I amended the Acts dating from 1853 and 1879 and possibly also the 1798 Act which was one of the oldest Acts on the Statute Book and still in effect. Trying to get people to open bank accounts is a complex matter. When I introduced the Payment of Wages Act Deputy Rabbitte was spokesman on labour affairs. This case law was complex in that we had to go back to Acts dating from before the foundation of the State. There was a reluctance on the part of well paid employees to open bank accounts. We succeeded in getting them to open bank accounts without much difficulty. FUE — now IBEC — finally got in-house agreements with trade unions to get them into the banking system.
What about the direct debits?
The direct debits and GIRO systems are now in place in Revenue on a voluntary basis.
Surely those who benefit from interest and penalties relief should not be obliged to get back into that situation by an administrative order?
Can the Deputy explain?
This is set out in amendment No. 42 which states "... in the case of VAT one-sixth of the annual amount payable... " or one-twelfth of the amount payable in the case of PAYE/PRSI. I am informed that the Revenue Commissioners are in favour of it.
It is difficult to get people into the system voluntarily. I do not intend to go over all the arguments I made about the 1988 amnesty except to say that excluding those who availed of the 1988 amnesty from the provisions of the incentive amnesty scheme would limit the proportion of the undisclosed liabilities being secured from an Exchequer point of view. Acceptance of the amendment would not improve the system generally.
The surcharge is a penalty and has to be pursued in the courts. However, it can be enforced by the sheriffs without going to the courts. Therefore, it is easier to collect as a tax than as a penalty and is more effective in ensuring compliance with the obligations to make timely and correct returns. Returns filling is the key to the self assessment system and the reason for it.
Would the Minister consider "the Brother's dog" amendment in respect of the special collector?
If "the Brother's dog" was to take up the job he would have to remain silent forever.
It is late in the day and late in the term and perhaps I have lost my ability to cross reference. For the life of me I cannot understand the Minister's rejection of this amendment. Specifically I do not understand what he means by "individuals outside the net who did not take up the 1988 amnesty" or how my amendment would cut across those people. I fail to make the connection, but that may be my fault. Of course there are people outside the tax net who did not take up the 1988 amnesty, but I do not understand why this amnesty should provide an inducement for them by giving those who benefited under the 1988 amnesty a second bite of the cherry. I do not follow that logic. People outside the tax net had an opportunity to avail of the main amnesty. Unfortunately, Deputy Davern has left the House, but his ghost, like the ghost of Banquo, dominated the proceedings since the start of this debate. He spoke of a hot money amnesty. Generally speaking, that was understood to mean hot money stashed away abroad, although, as Deputy Cox stated it has now come to mean hot money in another context. The logic of extending this amnesty to people who already had the benefit of an amnesty in 1988 escaped me and how Deputy Michael Ahern can say that is not encouraging an amnesty culture defies logic.
The last of the amnesties.
That is how Deputy Rabbitte sees it.
Such people benefited from an amnesty in 1988 and are now being afforded an opportunity of benefiting from an amnesty in 1993.
Even though they are known.
Ray MacSharry, the then Minister for Finance, stated unequivocally in 1988 that that would be the last chance. Simply because the Minister, Deputy B. Ahern, says that this will be the last chance, why should people not believe they will have another chance in 1997?
It might be an amnesty introduced by Deputy Rabbitte then.
That would be some irony, especially if it was by Government majority.
(Interruptions.)
The last big European amnesty was introduced in France by the socialist government.
That is why that government was booted out.
Could I remind the Minister that following that amnesty the French Socialist Government was found with its finger in the till with regard to party contributions?
Honourable people such as us would not do that; political funding is all we want.
Deputy Rabbitte, without interruption, please.
The best example of this is a case, which I think I did not refer to on Committee Stage, of a person who told me the weekend before last about paying £39,000 in tax arrears in 1988.
The Deputy did tell us that before.
The Deputy had better tell it the same way now.
That man told me that he handed over a cheque for £39,000 in 1988 and told the tax inspector to have a good look at it because it would be the last cheque the inspector would get from him until the next amnesty was introduced. That man has been proved correct. The introduction of another amnesty has done untold damage to the integrity of the tax system. I do not see how it would undermine the Minister's main purpose, which is to bring tax cheats who are outside the tax net into the system, if he refused the protection of this legislation to people who benefited in 1988. In this case the Government seems determined to use its great majority, although there has been no evidence of the second partner in coalition since this debate started. However, I presume if I press my amendment to a vote, as Fianna Fáil backbenchers would like me to do, we may find out if my colleagues who sit behind me support it.
Deputy Ferris will come in anyway.
I believe I should give them an opportunity of voting for an amnesty culture, because that is what they will do.
Will the Deputy confirm that the thesis of the £39,000 tax belongs to a graduate of the Doheny and Nesbitt "school of economics"?
Amendment put.
The Dáil divided: Tá, 34; Níl, 70.
Tá
- Allen, Bernard.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Burke, Liam.
- Carey, Donal.
- Clohessy, Peadar.
- Connor, John.
- Cox, Pat.
- Crawford, Seymour.
- Crowley, Frank.
- Cullen, Martin.
- Currie, Austin.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Flaherty, Mary.
- Gilmore, Eamon.
- Gregory, Tony.
- Harney, Mary.
- Hogan, Philip.
- Kenny, Enda.
- Keogh, Helen.
- Lowry, Michael.
- McGahon, Brendan.
- McGrath, Paul.
- McManus, Liz.
- O'Donnell, Liz.
- O'Keeffe, Jim.
- Quill, Máirín.
- Rabbitte, Pat.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, David.
- Aylward, Liam.
- Bell, Michael.
- Bhamjee, Moosajee.
- Bhreathnach, Niamh.
- Bree, Declan.
- Brennan, Matt.
- Brennan, Séamus.
- Briscoe, Ben.
- Broughan, Tommy.
- Browne, John (Wexford).
- Burke, Raphael P.
- Burton, Joan.
- Connolly, Ger.
- Davern, Noel.
- Dempsey, Noel.
- Doherty, Seán.
- Ellis, John.
- Ferris, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Eithne.
- Fitzgerald, Liam.
- Flood, Chris.
- Foxe, Tom.
- Gallagher, Pat the Cope.
- Gallagher, Pat.
- Geoghegan-Quinn, Máire.
- Haughey, Seán.
- Higgins, Michael D.
- Hilliard, Colm M.
- Hyland, Liam.
- Jacob, Joe.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenneally, Brendan.
- Kenny, Seán.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael P.
- Leonard, Jimmy.
- McDaid, James.
- McDowell, Derek.
- Moffatt, Tom.
- Morley, P.J.
- Moynihan, Donal.
- Moynihan-Cronin, Breeda.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Penrose, William.
- Power, Seán.
- Reynolds, Albert.
- Ryan, Eoin.
- Ryan, John.
- Ryan, Seán.
- Shortall, Róisín.
- Smith, Michael.
- Stagg, Emmet.
- Treacy, Noel.
- Wallace, Dan.
- Walsh, Eamon.
- Woods, Michael.
Tellers: Tá, Deputies Gimore and McManus; Níl, Deputies Dempsey and Ferris.
Amendment declared lost.
Amendments Nos. 4 to 7, inclusive, not moved.
Amendment No. 8 is in the name of Deputy Cox and I observe that amendment No. 84 is an alternative. I suggest, therefore, that we discuss amendments Nos. 8 and 84 together. Is that agreed? Agreed.
I move amendment No. 8:
In page 4, between lines 30 and 31, to insert the following:
"2.—Any moneys received by the Revenue Commissioners under the Waiver of Certain Tax, Interest and Penalties Act, 1993, shall not be used for current account purposes and may only be used for the purpose of discharging the national debt or for the funding of any capital project.".
At what time will there be a final vote on this Bill?
It will take place in five minutes' time at 6.45 p.m.
We will not be able to solve the problem of the national debt in such a short time.
I will be brief. I retabled this amendment for Report Stage. It was discussed at some length on Committee Stage. I was pleased the Minister gave an assurance, not that he would take this wording on board but that he agreed with the concept that it would be a bad idea to have a once-off windfall gain in Revenue next year and incur permanent expenditure in relation to that. Payments are due under this amnesty by 14 January 1994. It is important to avoid providing such windfall gains at the expense of current expenditure. There are many worthwhile projects on which such money could be spent, but whenever there is a permanent increase in current expenditure there is a corresponding permanent increase in tax liabilities. I am pleased the Minister accepted the principle of this amendment and I hope he observes that principle in respect of budgetary policy following any windfall amnesty.
It is fitting that the point on which this debate will be terminated is the point at which the truth about this legislation is being brought home. This legislation is nothing more than a cynical, crude, grubby stroke to grab whatever money this Government can on 14 January 1994 to shore up in a once-off way the public finances for next year. If we wish to see how adept this Minister is at political strokes we need only consider how he has handled the deliberate suppressing of the Exchequer borrowing requirement of this year by the use of the sale of shares in Greencore and Irish Life. There have been permanent increases in public sector pay and an underlying deterioration in public finances, but a short term depression of the Exchequer borrowing requirement has been brought about by the use of such strokes. If the Minister collected £500 million he would be able to argue, on the Exchequer returns at 1 July 1994, how the Exchequer borrowing requirement was lower in 1994 than it was in 1993. Following the tax amnesty in 1988 tax revenues decreased in 1989. We are working here on the basis of getting to the next budget on time and using expedient strokes, whatever the long term underlying trends are. The real truth is that this Bill is a desperate attempt by the Government to grab whatever money it can. The money is not being put into this year's accounts, which would have been the more honest approach. It is being put into the accounts with effect from 14 January 1994. This is being done deliberately to ensure there is a presentable face when Government expenditure is under control, because it is a high taxing and a high spending Government.
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 in respect of Item No. A.1, The Waiver of Certain Tax, Interests and Penalties Bill, 1993: "That the amendments set down by the Minister for Finance and not disposed of are hereby made to the Bill; that Fourth Stage is hereby completed and that the Bill is hereby passed."
Question put.
The Dáil divided: Tá, 70; Níl, 38.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, David.
- Aylward, Liam.
- Bell, Michael.
- Bhamjee, Moosajee.
- Bhreathnach, Niamh.
- Bree, Declan.
- Brennan, Matt.
- Brennan, Séamus.
- Briscoe, Ben.
- Flood, Chris.
- Foley, Denis.
- Foxe, Tom.
- Gallagher, Pat the Cope.
- Gallagher, Pat.
- Geoghegan-Quinn, Máire.
- Haughey, Seán.
- Higgins, Michael D.
- Hilliard, Colm M.
- Hughes, Séamus.
- Hyland, Liam.
- Jacob, Joe.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenneally, Brendan.
- Kenny, Seán.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael P.
- Leonard, Jimmy.
- McDaid, James.
- McDowell, Derek.
- Broughan, Tommy.
- Browne, John (Wexford).
- Burke, Raphael P.
- Burton, Joan.
- Byrne, Hugh.
- Connolly, Ger.
- Davern, Noel.
- Doherty, Seán.
- Ellis, John.
- Ferris, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Eithne.
- Fitzgerald, Liam.
- Moffatt, Tom.
- Morley, P.J.
- Moynihan, Donal.
- Mulvihill, John.
- O'Dea, Willie.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Penrose, William.
- Power, Seán.
- Reynolds, Albert.
- Ryan, Eoin.
- Ryan, John.
- Ryan, Seán.
- Shortall, Róisín.
- Smith, Michael.
- Stagg, Emmet.
- Treacy, Noel.
- Wallace, Dan.
- Walsh, Eamon.
- Woods, Michael.
Níl
- Allen, Bernard.
- Barrett, Seán.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Burke, Liam.
- Carey, Donal.
- Clohessy, Peadar.
- Connor, John.
- Cox, Pat.
- Crawford, Seymour.
- Crowley, Frank.
- Cullen, Martin.
- Currie, Austin.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Dukes, Alan M.
- Durkan, Bernard J.
- Flaherty, Mary.
- Gilmore, Eamon.
- Gregory, Tony.
- Harney, Mary.
- Hogan, Philip.
- Kenny, Enda.
- Keogh, Helen.
- Lowry, Michael.
- McDowell, Michael.
- McGahon, Brendan.
- McGrath, Paul.
- McManus, Liz.
- O'Donnell, Liz.
- O'Keeffe, Jim.
- Quill, Máirín.
- Rabbitte, Pat.
- Yates, Ivan.
Tellers: Tá, Deputies Briscoe and Ferris; Níl, Deputies E. Kenny and Boyland.
Question declared carried.