I move:
"That the Dáil do now adjourn".
The purpose of this motion is to reverse the decision taken by the Minister for Finance, without the authority of the Dáil, to change the terms of a tax incentive scheme, agreed after a very hotly contested debate here in this House by a majority vote, to make it much more generous than had been the original intention.
Perhaps I may explain what is involved. We are not talking here simply about a tax amnesty. Normally a tax amnesty is understood to mean that people who did not pay their taxes on time are allowed, at a later date, to pay them in full but without any interest or penalties being added; that is a tax amnesty. This is not a tax amnesty. This is what is rather insidiously described as a tax incentive scheme. Effectively it is an offer whereby people who should have paid income tax at, say 52 per cent, the top rate in 1990 or 1989, or capital gains tax at a rate of 40 per cent, but did not pay it at the time, broke the law and ignored their obligations, will be allowed to pay it now. Not only will they not be asked to pay any interest or penalties but they will be allowed to pay it at a rate of 15 per cent. In other words, more than twice as much as the tax they will actually be paying will be written off. They will have a large part of the tax struck out in addition to being exempted from penalties or any normal interest requirement.
This very strange, unprecedented offer to write off the tax of people who did not pay it on time was justified by the Minister for Finance at the time on the grounds that only if one did something like this would one be able to bring in some hot money from overseas. There were supposed to be vast amounts of money in secret accounts, in Swiss or Channel Island accounts, which people would never bring into this country and the only way one would get anything from these people would be to offer this special low rates of 15 per cent tax on the income they derived from this money, as against the 50 per cent rate of tax they might have paid had they left that money at home. It was to get this money from abroad that would not otherwise come in that this perversion of the tax system was to be allowed.
I did not agree with this, my party did not agree with it, and we opposed it quite strongly. We believe it to be unfair to those who pay their tax in full and on time to see others who did not pay their tax get away with paying only 15 per cent of their income in tax. Our arguments fell on deaf ears because the Fianna Fáil and Labour Parties were so desperate they felt they needed this hot money from abroad to plug a hole in their budget because they were over spending. They argued that they would only get the money into the country by doing it this way.
It now transpires that this 15 per cent tax rate, which involves a write-off of the equivalent of approximately 35 per cent of tax, is being offered in respect of money that had already been declared, that the Revenue Commissioners knew all about already but just had not got around to collecting. In other words, it is being offered in cases where there is absolutely no need for the incentive to bring the money in because the money was already here and had been identified by the Revenue Commissioners. The Minister was willing to allow those people pay at 15 per cent, whereas those who paid their tax on time paid up to 50 per cent. How could that possibly be fair? The cynics will say fairness does not exist in the tax code, it is a question of getting the money in. That is not so. Any law that is not based on some sort of concept of the general good, on some sort of concept of fairness, ultimately will pollute the entire legal system.
This decision of the Minister for Finance, apparently supported by the Department of Finance and the Revenue Commissioners, is polluting the Irish tax system in a very serious and undermining way. It is undermining the integrity of the system in a way that is very serious indeed. People will say maybe there will be another tax incentive scheme in 1998 and another in the year 2004. They will put the money aside for three or four years and eventually there will be another Fianna Fáil and Labour Government in office who will again be desperate for money and, in their search for solutions will pull down the 1993 Bertie Ahern model and offer another tax incentive scheme. They will then get away with paying much less than the proper rate of tax. That calculation will be made by lots of people who do not avail of this tax incentive scheme. Lots of people who will earn money next year — who obviously could not avail of this tax incentive scheme because they will not yet have earned the money — will be weighing up in their minds whether to pay. Many of them will decide to wait for another incentive. In particular I predict they will say that if, when an incentive or amnesty is announced, they put on enough pressure through their Fianna Fáil or Labour TD they will be able to have the scheme extended. They will not pay their tax on time but will wait for the announcement of another amnesty.
That sort of thing undermines the integrity of the tax system. It undermines the whole concept of standards in public life. It is quite ironic that, on the same day the Government approved an intrusive Ethics in Government Bill — under whose provisions everybody will have to declare all sorts of information about what they own — the same Government introduces a completely unethical change to a tax incentive scheme to extend it to people who broke the law and did not pay their taxes and offer a reward for their malfeasance, even though the Revenue Commissioners had found them out and there was no need to offer them an incentive. What concept of ethics in Government could that possibly represent?
I wish to make another point which is relevant to this debate. I believe that this proposal is unconstitutional in the same way that I believe the President will decide today to refer the Matrimonial Home Bill to the Supreme Court because of a doubt as to its constitutionality. The reason the President will be referring the Matrimonial Home Bill to the Supreme Court for examination of its constitutionality is that it discriminates in its treatment of two sets of families in exactly the same situation but for the accident of a date. A family who broke up before a particular date will not be able to avail of the provisions of the Bill while those who broke up after that date will be able to avail of them. It is on that discrimination, on the simple accident of a date, between people whose circumstances are otherwise exactly the same that I believe the President will decide, on the advice of the Council of State, this evening to refer that Bill to a test of its constitutionality. There is at least a 50-50 chance that the Bill will be struck down on that ground.
Exactly the same circumstances apply in the case of this amnesty. Let us take the case of two taxpayers both of whom have four children, both of whom earned £20,000 in 1988, both of whom had the same mortgage, are exactly the same in every respect, one paid their taxes on time, at the top rate of 52 per cent, while the other did not declare his tax on time but was subsequently found out by the Revenue of declared himself to the Revenue and agreed to pay the tax over a number of years and has not yet paid it in full. That second party who is exactly the same in every other material respect, in terms of the actual liability to tax in respect of the year in question, will get away with paying only 15 per cent tax whereas the former party will have paid up to 50 per cent tax. In other words, two people in precisely the same situation will be charged different rates of tax.