Waiver of Certain Tax, Interest and Penalties Bill, 1993 [ Certified Money Bill ]: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Finance (Mr. B. Ahern)

The Waiver of Certain Tax, Interest and Penalties Bill, 1993, which is before the House today provides the legal basis for the tax amnesty. This amnesty has two objectives: first, to give those who failed to meet their tax obligations in the past one last chance to put their tax affairs in order, in advance of the introduction of more stringent penalties for tax fraud and the continuing strengthening of Revenue's compliance programmes; and secondly, to obtain the best possible yield from undisclosed tax liabilities for the period up to 5 April 1991, given that such evasion is difficult to detect now. In addition, where funds relating to tax evasion have up to now been held dormant, the scheme is designed to facilitate their use for the purposes of general economic activity and employment.

There is a fundamental difference between the type of amnesty for which this Bill legislates and the interest and penalties waiver arrangement operated in 1988. While in its own terms the 1988 scheme was an unqualified success most of the yield from it related to the clearance of known arrears. Very few new cases came on record and, therefore, the amount of previously unknown income on which tax was paid was quite limited.

The present amnesty is aimed at the taxation liabilities from the pre-1991 era which are not on the Revenue Commissioners' records, either because the people concerned had only partially disclosed their income or because they had escaped the tax net altogether. The experience of the 1988 amnesty strongly suggests that simply offering an interest and penalty waiver to such people would not induce them to bring their affairs up to date. Although the Revenue Commissioners have put more resources into compliance work in recent years, and although a more stringent legal framework has been put in place, it would nevertheless be unrealistic to expect that those who in the past successfully evaded taxes, and have escaped full detection for a lengthy period, would be prepared to pay up in full now under an interest and penalties amnesty.

To insist now on the full payment of the tax liabilities on such undisclosed income, especially given that the tax rates applying until the mid-1980s were very high, would mean that very little of such tax would be paid. It is in recognition of this reality that the Government decided that a lesser charge was an essential feature of any scheme aimed at bringing these people into the tax net. The special confidential application procedure responds to the view that, unless those availing of the scheme to bring their tax affairs up to date are assured that this will not expose them to special attention, the uptake would be very limited.

I will, first, give a broad outline of the scheme. I will then deal with some particular features of it as set out in the Bill. The overall amnesty scheme covers the generality of undischarged tax liabilities in respect of the period up to 5 April 1991. There are certain exceptions designed to protect as far as possible the yield from ongoing Revenue enforcement activities. Otherwise, the scheme covers all arrears of tax, including both liabilities in respect of previously undisclosed amounts and liabilities in respect of certain other amounts unpaid. The scheme does not cover liabilities for social insurance contributions; these will be dealt with under the parallel amnesty for social welfare already announced by my colleague, the Minister for Social Welfare.

I must emphasise that the benefits of the amnesty scheme are only available to those who regularise all their pre-1991 tax affairs. A basic condition of the scheme is that applicants must discharge, under the scheme or otherwise, their outstanding liabilities for the relevant period under all of the various tax headings covered by the overall scheme. There is a further requirement, which is that the taxpayer must make a timely return with full disclosure in respect of the latest tax year. Accordingly, an individual must deliver by 31 January 1994 a correct return of income for 1992-93. An equivalent condition applies in the case of a company.

This requirement of the scheme is designed to ensure that those seeking to regularise their past tax affairs must be prepared to submit a timely and accurate return on the next occasion. Failure to fulfil this requirement will lead to a withdrawal of the benefits of the scheme. Accordingly, unless persons availing of the amnesty come fully within the tax net and keep their affairs in order, they will be exposed to very severe sanctions.

The scheme has two distinct tiers. The innovative features are in the first tier to which I will refer as the incentive amnesty. The core provisions for this tier are set out in section 2 of the Bill. This incentive amnesty relates to outstanding tax, levy and health contribution liabilities on income or capital gains and it only applies to individuals. Individuals seeking to avail of this tier must state the total amount of the relevant income and gains, pay 15 per cent of that amount and make certain declarations. Subject to the validity of these declarations, including full disclosure of such income and gains, the applicants' tax liabilities in this respect will be considered to be fully met. Also, any penalties or interest which might otherwise arise will be waived. Applicants who fully comply with these requirements can be assured that their pre-6 April 1991 tax affairs will not be the subject of further Revenue pursuit or investigation.

The second tier closely resembles the amnesty scheme operated in 1988 and I will refer to this as the general amnesty. The main provisions for this scheme are in section 3. As in 1988, this tier of the scheme also extends to companies. Under this general amnesty, where the relevant tax liabilities are paid in full by a specified date, all related interest and penalties are waived. The general scheme covers income tax, capital gains tax, levy and health contributions, capital acquisitions tax, residential property tax, stamp duties, value-added tax, corporation tax and corporation profits tax and liabilities of employers in respect of PAYE.

Applicants under this tier, unlike the incentive scheme, will have to provide the normal returns required in respect of the various tax headings, giving a year by year breakdown of the relevant amounts. This general amnesty will apply to individuals availing of the incentive scheme who have relevant liabilities for the other taxes covered by the general amnesty. It will also apply to persons without outstanding liabilities on income or gains.

Special confidentiality procedures apply in relation to the first tier. The Government has decided that these are necessary in order to give maximum assurance to those availing of the incentive amnesty scheme. Accordingly, applicants for this tier will be required to reveal their identity only to a special collection office within the Office of the Revenue Commissioners. The staff of this special collection office will be obliged under section 7 of the Bill not to disclose to anyone, including other staff of the Revenue Commissioners, any information obtained in the course of administering the amnesty.

The staff of the special collection office may, however, confirm the validity of certificates of moneys received under the amnesty which will be issued to an individual by the special collection office. This will only arise where the individual concerned has already acknowledged to the Revenue Commissioners he or she has availed of the incentive scheme. Furthermore, as there is likely to be a close connection in practice between non-disclosure of VAT liabilities and evasion of income tax, an individual who avails of the first tier can apply to the special collection office in respect of his VAT liabilities also. However, the requirement that there be a full discharge of those VAT liabilities applies as in the general scheme. Alternatively, VAT can be discharged to Revenue in the ordinary way under the general amnesty.

A person seeking to avail of the general amnesty must, as in 1988, apply to the Revenue Commissioners in the normal way. The full tax due must be paid but any interest or penalties arising, except those resulting from court proceedings, will be waived. Where such a person has reached agreement with the Revenue Commissioners in respect of these liabilities, the question of further pursuit will not arise. Full declaration must, of course, be made under this amnesty.

Section 4 provides that the full benefits for both tiers of the amnesty will be withdrawn in certain circumstances. Such withdrawal will be made where, in the case of an individual, a correct return of income for 1992-93 is not delivered on time; in the case of a company, a correct return for any accounting period ending in the year to 31 December 1993 is not delivered on time; any declaration given by a taxpayer to the chief special collector under section 2 or 3 is proven to be false; or the amount paid by the taxpayer, under any tax heading under the general amnesty was less than the full amount of arrears due by him or her.

The legislation provides for clear deadlines for application for both tiers of the amnesty and the making of the payments required. In framing these deadlines I have recognised that where tax arrears over a number of years have to be brought to account, a reasonable time period is appropriate.

For the incentive scheme, all applications must be submitted not later than 30 November 1993. Every such application must be accompanied by the prescribed declarations and in particular must specify the relevant amount of income and gains for which amnesty is sought. The deadline for the associated payments is 14 January 1994. This period of grace for payments as distinct from declarations is intended to facilitate those needing to liquidate assets.

For the general scheme, the requirement is that outstanding tax liabilities in respect of the relevant period be brought fully up to date by 14 January next. Any applicant for the incentive scheme with other undischarged tax liabilities must avail of this general scheme to clear these liabilities.

Senators will understand that those availing of the scheme must, if the need arises, be able to prove they have done so and must also be able to show what amount they paid. Accordingly an individual who by the appropriate date makes the declarations required for the incentive amnesty and makes the necessary payment will be given a certification showing that he or she has availed of the scheme and the amount paid. The form of certificate will be prescribed by the Revenue Commissioners with my consent after the Bill has been enacted.

In order to protect Revenue's ongoing enforcement and collection programmes, there are a number of exclusions from the scope of the 15 per cent amnesty. The incentive amnesty is not available to individuals who, on 25 May 1993, the date of announcement of the amnesty, were the subject of investigation or inquiry by Revenue in respect of tax liability for the period to 5 April 1991 and had been notified in writing of the position.

The following amounts of tax are also excluded from the scope of the incentive scheme: tax already at enforcement stage on 25 May last. This covers cases with the sheriffs, cases where court proceedings have been initiated and cases which are the subject of a notice of attachment; tax which, on that date, was under appeal; tax which, on that date, had been agreed with a tax inspector but had yet to be paid; and tax not paid by virtue of an avoidance scheme which would otherwise have been payable on or before 25 May. Neither is the incentive scheme available to individuals with undisclosed or undischarged liabilities deriving from an illegal source of activity. For this purpose, evasion of taxes and non-compliance with the exchange control provisions will be disregarded.

However, the general amnesty, under which interest and penalties will be waived on full payment of the tax due, will apply to these excluded amounts of tax. Individuals excluded from the incentive scheme are also covered by this general amnesty.

The Bill provides for specific declarations to be made to the special collector by applicants for the incentive amnesty. The applicants must first make a full and true declaration of the amounts of income and chargeable gains coming within the terms of the scheme. This declaration must also be made where VAT arrears are remitted to the special collection office. Secondly, they must make a declaration none of these amounts arises from any illegal source or activity, with the exception of tax evasion or non-compliance with the exchange control provisions. Where either of these declarations is proven to be false, the benefits of the scheme will be withdrawn. However, credit will be given against the full tax then due for payment made under the scheme.

It is clear that certain assurances in relation to Revenue investigation into tax affairs of the relevant period are essential to the uptake of the scheme. Section 5 accordingly provides that a tax inspector or other Revenue official will, in certain circumstances, be precluded from commencing an investigation in respect of tax which has been paid by an individual to the chief special collector for any period covered by the amnesty.

Because of the special confidentiality rules applying to the 15 per cent amnesty, Revenue officials outside the special collection office will have no way of knowing who avails of the amnesty. The legislation, therefore, provides that if in the course of their normal audit and inquiry activities the Revenue Commissioners seek to inquire into the pre-April 1991 affairs of an individual who has availed of the incentive amnesty, this individual may challenge the commissioners' right to pursue such an investigation. To do so, he must produce within 30 days a certificate of receipt from the chief special collector in respect of the liability to tax to be investigated. The Revenue Commissioners will be prohibited from pursuing such an investigation further unless they can show to the satisfaction of the appeal commissioners that any declaration made by the individual to the chief special collector under section 2 or 3 was not a full and true declaration of the amounts of his or her undisclosed income or chargeable gains, or of the amount of value-added tax contained in the arrears of tax paid, as appropriate.

Section 6 provides for the situation where an individual receives a demand for an amount of tax which has been discharged under the amnesty to the chief special collector, including VAT remitted to the chief special collector. The demand will be withdrawn where the taxpayer produces evidence he or she has availed of the amnesty. The evidence must be produced within 30 days of receipt of the demand or, if later, of the date of receipt of the certificate from the chief special collector.

Section 7 contains the special confidentiality provisions which the Government consider to be necessary to the success of the scheme. These ensure that persons who avail of the amnesty can do so in the assurance that the special collectors who will administer the incentive amnesty, will be bound by stringent confidentiality requirements over and above the rules which bind all Revenue staff to respect the privacy of taxpayers. Revenue officers assigned as special collectors will give a permanently binding undertaking, in the form of a declaration of confidentiality, that they will not disclose any information obtained in the course of administering the amnesty. Special collectors will be under the control of a chief special collector who will be responsible for the confidential administration of the incentive amnesty.

Section 7 provides for only the most limited and necessary exceptions to the prohibition of any disclosure of information by special collectors. Special collectors may, if requested to do so by a Revenue officer, confirm or deny, without any elaboration, the validity of a certificate, or evidence of a certificate, produced to the officer by a person availing of the amnesty. Also, the Comptroller and Auditor General and the Accounting Officer of the Revenue Commissioners are to be given such information as they may reasonably require to check that the amnesty has been correctly administered. However, the Comptroller and Auditor General and the Accounting Officer may use any information they receive from special collectors only for the purpose of ensuring that the amnesty is administered correctly. The results of the amnesty may only be communicated to the Minister for Finance or the Revenue Commissioners in the form of aggregate results.

The Bill as published provided for a penalty of £500 for a breach of confidentiality by a special collector. However, I am glad to tell the House that, on reflection, I decided to remove this provision and I introduced a Report Stage amendment in the Dáil to this effect.

Section 8 ensures any payments made to the chief special collector will be payable to the Revenue Commissioners and lodged confidentially, along with all other payments to the commissioners, in their general account in the Central Bank.

Before I leave the provisions of the incentive amnesty, I want to deal briefly with two areas. The first relates to close companies. Where a director, who is also a main shareholder of a close company, has evaded tax in the past through not declaring income received through the company, it could be argued that this situation is similar to that of a sole trader who can benefit from the incentive amnesty in respect of previously undeclared income relating to his trade.

The Government has considered this point carefully and has concluded that it would not be appropriate to extend the amnesty to such close company situations for two main reasons. To begin with, the analogy with sole traders is only a superficial one because individuals who incorporate their business have voluntarily entered into a regime which confers considerable legal and commercial advantages on them as compared to a sole trader. Secondly, where a director-shareholder of a close company diverts the company's money to his own use, he is breaching the legal obligations which result from incorporation.

Although the Government recognises that the exclusion of such close company situations is likely to reduce the potential take-up of the incentive amnesty, we are not prepared to apply this amnesty to individuals who have broken company law in this way. Such breaches of company law can have adverse effects on trade creditors, lending institutions, company employees and others.

I should, however, point out that the general amnesty does apply to companies in regard to their outstanding tax liabilities. Therefore, the opportunity does exist for any company to regularise its taxation affairs in respect of the period prior to 6 April 1991 without incurring interest or penalty charges.

The second area whose inclusion has been argued for is funds covered by tax avoidance schemes. The argument has been made that if tax evasion is to receive the benefit of the incentive amnesty, then tax avoidance should be included in it as well. However, this argument ignores the purpose of the incentive amnesty scheme.

The purpose of the incentive amnesty is to ensure that some tax is paid in funds which to date have escaped the tax net and which seem very likely otherwise to continue to do so. Funds covered by avoidance arrangements are not in this category. Substantial funds covered by tax avoidance arrangements are already on the record for tax purposes. Whether any liability arises on these funds will, in practice, depend on whether the tax avoidance scheme stands up or not. This is a matter which will be dealt with under existing tax law. However, by using a tax avoidance scheme the taxpayer is in effect declaring, or is prepared to declare, that he or she has income or capital gains which would otherwise be taxable. These funds are, therefore, in a different category from funds which have never been declared for tax purposes and which, but for the incentive amnesty, almost certainly never would be so declared.

The granting of the two amnesties I have outlined represents the last chance for tax evaders to bring their tax affairs up to date. It is only right and proper that this Bill should also contain penalties both for those who abuse or ignore the amnesty scheme and for future non-compliance. Thus severe penalties are provided for persons who, having failed to meet their obligations for the period covered by the amnesty, then ignore the incentive amnesty or abuse it by making less than full disclosure under it.

Section 9 provides that an individual who abuses or ignores the amnesty by failure to make or by falsely making the appropriate declarations and who, in respect of any years covered by the amnesty, has either failed to make returns or has submitted false returns, will be guilty of an offence and liable to penalties.

In the Bill as published it was provided that the penalties would be either on summary conviction, imprisonment for a period not exceeding 12 months or on conviction on indictment, imprisonment for a period not exceeding eight years.

In response to representations made in the Dáil and elsewhere I reconsidered the matter and concluded that a modified scale of penalties commensurate with the gravity of the offence would be more appropriate. Section 9 of the Bill was amended accordingly on Report Stage in the Dáil. The revised penalties, while still substantial, are graduated to take account of the difference in the amount of tax paid by a person and the amount he would have paid if he had made a correct return of income, profits or gains, etc.

The new range of penalties will be as follows. In the case of summary conviction where the amount of the difference is less than £1,200, a fine will be imposed not exceeding 25 per cent of the difference or, at the discretion of the court, a term of imprisonment not exceeding 12 months, or both fine and imprisonment. Where the amount of the difference is £1,200 or more, a fine will be imposed not exceeding £1,200 or, at the discretion of the court, a term of imprisonment not exceeding 12 months, or both fine and imprisonment.

In the case of conviction on indictment a similar approach will apply. Where the amount of the difference is less than £5,000, a fine will be imposed not greater than 25 per cent of the difference or at the discretion of the court, imprisonment for not more than two years, of both fine and imprisonment. The amount of the fine and/or imprisonment will increase in a tiered manner as the amount of the difference increases up to £100,000. Where the difference is £100,000 or more, the fine will be not greater than twice the difference and there will be mandatory imprisonment for not more than eight years.

These modified penalties, coupled with the discretionary element which will apply in all but the most serious cases of abuse, represent a reasonable response to the anxieties which had been expressed in this regard.

Section 10 limits the possibility of mitigation of certain fines and penalties under the existing legislation which governs such mitigation. At present, the Revenue Commissioners or the Minister for Finance can, after a court has made a judgment, remit the level of a fine or penalty to any extent, including remitting the fine or penalty entirely. From now on, in such circumstances these authorities will be able to remit only to the extent of 50 per cent of the amount of the fine or penalty. Moreover, in cases where the amnesty has been abused or ignored, no mitigation will be allowed.

Section 11 provides that, as respects tax offences committed after the passing of this Bill, a taxpayer who files a false return, or makes a false claim for an allowance or a relief, or a person who assists a taxpayer to file a false return or to suppress sources of income will be liable to the same range of penalties as described in relation to section 9.

Section 12 brings the appropriate declaration under section 2 or 3 within the scope of sections 500 and 501 of the Income Tax Act, 1967, which relate, respectively, to failure to make a return and the making of an incorrect return for the purposes of civil proceedings for penalties. The penalties are £750 for failure to give the appropriate declaration and, in respect of an incorrect declaration, £100 plus an amount equal to the sum of the unpaid taxes.

The last area dealt with by the Bill concerns easier access by the Revenue Commissioners, where tax evasion is suspected, to information in financial institutions, including particulars of accounts. These appertain only to a person who is a resident of the State. No change is proposed in the present position regarding the accounts of non-residents of the State. Section 13 contains the relevant provisions and specifies particular penalties for non-compliance. Whereas at present Revenue must make application to the High Court, such access may in future be authorised by the appeal commissioners in certain circumstances. The circumstances are that the taxpayer has filed a return of income or statement of profits or gains which his or her tax inspector feels is unsatisfactory; the officer has reasonable grounds to believe that the taxpayer has an undisclosed account or accounts with the financial institution or that the financial institution concerned has information which would establish that the taxpayer's return or statement is materially false; and the officer, on application to the appeal commissioners, secures a determination from them that he is justified in seeking details of accounts held by the taxpayer with the financial institution and certain ancillary financial information.

Where the appeal commissioners give such a determination, there is provision for appeal on a point of law to the High Court. The penalty for failure by a financial institution to comply with a request for information, made in accordance with the provisions of the section, is £15,000. That penalty can be increased by an amount of £2,000 per day in certain circumstances.

In response to representations made in the Dáil and elsewhere, I introduced three amendments to section 13 on Report Stage in the Dáil. First, it is now explicitly provided that both the financial institution and the taxpayer will have all those rights which are available to a person who appeals against an ordinary assessment to income tax. In other words, the financial institution and the taxpayer will have the right to be given notice of the application, to be present at the hearing and to be represented by an accountant, a solicitor, a barrister or a member of the Institute of Taxation at the hearing which will be held in camera.

Secondly, the period within which an authorised officer of the Revenue Commissioners is obliged to inform a financial institution of a determination of the appeal commissioners has been reduced from 30 days to 14 days. This caters for the position where a financial institution is dissatisfied with the determination of the appeal commissioners as being erroneous in law. Where this occurs the financial institution is entitled to declare its dissatisfaction and, within 21 days of the determination, require the appeal commissioners to state and sign a case for the opinion of the High Court. This arrangement is of particular importance where the institution does not attend the hearing of the appeal commissioners, and, consequently, is unaware of the determination until so informed by the authorised officer which he must do within 14 days of the determination. The institution will now have a minimum period of seven days within which to express dissatisfaction and request a case stated for the High Court.

Thirdly, the taxpayer as well as the financial institution will be entitled to receive notification of the determination of the appeal commissioners, and, where appropriate, to be made aware whether particulars are to be furnished by the financial institution within the period specified.

Section 14 places all matters relating to the Bill under the care and management of the Revenue Commissioners, subject to the chief special collector's managerial control of the arrangements for the amnesty. Section 15 contains the provisions for the Short Title and Construction.

This Bill represents an imaginative attempt to induce persons who have undeclared pre-1991 tax liabilities to come forward, make a payment and become fully compliant for the 1992-93 tax year onwards. The Bill does this by offering, where certain conditions are met, a 15 per cent tax rate for individuals with undeclared or under-declared income tax or capital gains tax liabilities, and by offering a waiver of interest and penalties on other tax undischarged. It combines these carrots with the stick of severe penalties for ignoring or abusing the amnesty and for future non-compliance. It also offers the potential for a significant inflow of badly needed funds into the Exchequer, and for bringing hitherto dormant funds into action in the economy. The Government are hopeful that the outcome will be an improved Exchequer position in 1994 and thereafter an increase in the numbers of compliant taxpayers and a more dynamic economy.

I commend this Bill to the House.

Mr. Cregan

Like the Minister, over the past weeks I have listened to debate about this Bill. I recognise that the finances of the country are in a serious state and I realise that the Minister and his Cabinet colleagues are concerned about where revenue will come from. When I look at the incentives and benefits under this amnesty and when I look at the pressure which can be exerted by the Revenue Commissioners on a person who is trying to pay their bills and stay in the tax net, I have to ask whether we are being sincere with everybody.

Over the past few weeks I have listened to views expressed about the type of people concerned. I have heard Members of the other House speak about individuals who have made money but did not disclose it. Ordinary individuals and tradesmen can only make so much money. I heard about the fellow who fixes washing machines and wants to be paid in cash only. These are not the people we are talking about. There is no queue of people looking to have their washing machines fixed. I am talking about big business, about people who have not disclosed their income. I am talking about the yearly cheque from the creamery which is not disclosed and about the frightening atmosphere that has been created in our society about where that cheque goes. The creamery will disclose that it has been paid to a certain person or persons but where does it go?

Many years ago I spoke to a person involved in insurance about the number of people who came to him at the end of the year to know what to do with their money. It is a sad reflection on us that we have created such an attitude. There is no incentive to comply with the rules. When I started in business, the idea of speaking to the tax man was a great worry. Now the opposite is true because if one is in the system one uses it and the tax man gets less and less.

However, it is only right that I stand up and protect the person in the system and speak for them. Some time ago I made reprsentations on behalf of a company which employed 12 people full-time and three part-time. The owner of this engineering firm had a tax bill of £77,000. He was up to date with PRSI and PAYE payments but he owed tax arrears. He found it hard to keep his company going because of this £77,000 and the banks were not prepared to talk to him.

I had discussions with officials in the Department of Finance and the Revenue Commissioners and due to the emphasis put on employment, consideration was given to his case and a fair settlement was reached for payment over a three year period. When I consider the amount of pressure that was put on that individual and I look at this Bill which grants an amnesty for people who took money out of the State and are now disclosing it, I wonder how the officials feel.

The commitment by the special collectors that confidentiality will be maintained will mean that people in the same Department will be working against each other. I cannot understand how we could allow that. I could understand it if we were dealing with areas of crime or justice, but I cannot see how it can be allowed to happen if we want a team working together to make sure that everybody is treated fairly. I want to emphasise this point about fairness.

Over the past two weeks I have spoken to many young people in business about this amnesty and they are worried. Most of our young people are straight and they want to be fair and above board. However, this amnesty does not encourage that. I do not know how anyone could say it is easy to be in business today because people who take their business seriously have been feeling the pressure over the last two or three years. I do not understand how they can even keep the payment of their taxes up to date. The increases in VAT, PRSI and PAYE as well as paying 14 or 15 per cent interest on borrowings, despite interest rate reductions almost every three weeks, do not make things easier for the businessman.

There has been no reduction by the banks in the commercial rates. That is something the Minister should examine immediately. He should ask why interest rates are not dropping. These people are asking why they are not being treated in the same manner. I understand that the Government's purpose in introducing this Bill is to raise extra revenue. However, I find it difficult to understand how the economy can function in view of the scale of Government expenditure — £10 million per day on social welfare — and the fact that there are fewer than one million people working.

When the measures introduced by this Bill take effect, there will be no further options to explore. At that point taxes will have to be increase to ensure inflows of revenue. There is nothing wrong with increasing taxation provided such increases are fair. However, the measures proposed in this Bill are not fair. This is the message being sent to people, particularly the big business people. I fail to understand the emphasis that is being placed on the small individual when there are companies that have moved money elsewhere. One only has to look at the investigations that have carried out over the last few years, for example the beef tribunal. When the ordinary person hears what is happening in big business he is entitled to ask what it is all about.

Does the Government really want to pursue the small individual, such as the repairer of washing machines? Such people are the backbone of the economy. They should be left to get on with their work and to rear their families. Unfortunately matters have come to this level where every small businessman, such as the small shopkeeper, is being investigated while, at the same time, an amnesty is being introduced to benefit those who have big money.

I never thought I would see such a development in Irish society. I never thought those who are honest in their financial affairs would be harmed. What does the PAYE sector make of these developments? Every week and every month more than half the earnings of those in the PAYE sector are deducted. In other words, a PAYE worker earning £25,000 is taking home between £12,000 and £16,000 a year.

The Government is proposing that anybody who did not disclose their liabilities up to 1991 will be penalised at a rate of 15 per cent. This is most unfair, especially to the PAYE sector. I can understand why this sector questioned the Government's proposals. If all tax liabilities are disclosed up to 1991 under this Bill the full tax regulations will apply in the year 1991-92 and from 1993 onwards. If accountants submit incorrect declarations in the year 1992-93, before the liabilities up to 1991 are discharged, what is the position? If accountants acting on behalf of certain people have already discharged liabilities in 1991-92, what is their position if those for whom they acted now seek an amnesty? Will the accountant advise such people that they cannot declare because if they do they will be caught for the 1992-93 period? This is an area that the Minister must monitor.

I welcome the move to raise more revenue and to simplify the tax code. I also welcome the idea that it should be clear that all will be treated equally. However, this is not what the Government is proposing. The Government is helping the people who did not pay their taxes by charging them only 15 per cent if they comply with the terms of this Bill.

I had meetings in Cork with trade union officials on the 1 per cent income levy. They told me the impression they got from members of the Cabinet was that if the proposed amnesty produced the desired result the income levy would be eliminated. This is fair if the Government give this commitment, but will the commitment be given and will we get sufficient money from the amnesty? Will this amnesty apply to those already in the tax net, especially those who want to pay their VAT, PAYE, PRSI and, most importantly, those who want to protect their employees by paying employers PRSI? Legislation must provide full protection in this area, especially for those who change employment.

I believe the Government has gone too far in the proposals to investigate individuals. I was saddened to hear the Minister say recently that the would welcome the day when tax evaders would be jailed. It is very serious when a Minister for Finance has to make such a remark. Many people have expressed concern about the Minister's statement. I do not suggest that he should not make such a statement or that it should not be welcomed by those who must pay their full share of tax. However, it is a sad reflection on the country when the Minister makes such a remark because it indicates the amount of money that has been moved out of the country.

It is also a sad reflection that conditions were not created in the country where such money did not have to be moved abroad. Why was the money invested abroad? Why is it still being sent abroad? It is right that other countries, for example the UK, refuse to disclose details of any accounts involving money moved out of this country. The authorities here have the same attitude to foreign inflows of money, for example during the devaluation crisis.

Regarding the situation where cheques are received from organisations which are not used and are not placed in the country, I question why incentives were not provided to have such cheques lodged in the banks. Such incentives could apply where it is known that people are not in the tax net, particularly in the agricultural sector. Many of these people have plenty of money which they do not disclose.

There are company directors and companies, for example chemical and cosmetics companies, who do very well in this country but whose earnings do not stay here. The situation must be addressed. Are we prepared to prosecute people who may be working for international companies if they do not make disclosures? I would like answers because they are the people with the big money and they are the people to whom we are granting an amnesty.

Individuals and small organisations may be under the impression that they owe money and a worry to people in the tax net is that they did not pay the full amount. The Minister should be cautious and ensure that every consideration is given to avoid creating an atmosphere where these people will liquidate their businesses or go bankrupt. I know of organisations and individuals who have said they are better off not employing anyone. The Minister should not create this type of atmosphere.

We should not have a situation where people do not want to meet the Revenue Commissioners. The opposite should be the case. People should be comfortable walking into the office of the Revenue Commissioners even though the may owe money. This is not the case now and that is unfortunate for the vast majority of people who want to be fair and to take on more employees, but this is not happening. The final part of the Minister's speech is significant in this regard. There is a strong emphasis on how fast we can get into the courts and make sure that people pay their liabilities and the interest. I know of individuals who owe tax and the interest being charged is literally stifling them. These individuals now look at this Bill and ask whether they were right to declare their interests or if they should liquidate their holdings or leave and go somewhere else. Revenue know this.

I pay my taxes and I know that the demand on Revenue to get money is so strong that they are making every effort possible. I cannot understand how the Department did not make a better argument because this approach is very unfair to the vast majority. I am trying to make my case without mentioning particular areas or individuals. I have been around as long as the Minister and I cannot understand how we cannot find other avenues for getting money from these people. Other areas should be examined by the legal people in Revenue to ensure that these people pay their full taxes.

I am trying to emphasise how important it is to listen to the ordinary person who is running a small shop, whether it is a huckster's shop or a pub. These people want to operate within the law and still be financially comfortable. The emphasis in this country is on service industries which do not have a manufacturing base. Whether we like it or not we are becoming a service area and it is important that every businessman who could employ one more person should be asked to do so. We are doing the opposite however. However, I do not wish to be negative.

I welcome the idea of getting in more money because it is badly needed but not if it means aggravating the majority of taxpayers. This was obvious last night at a meeting of Aer Lingus workers. Some 1,500 of them will be without jobs within a short period. From where will the money to be invested in that organisation come? That is an argument for another day.

I can understand what the Department, the Minister and the Cabinet are trying to do but may I make one or two points? There has been discussion about the type of people who are going to come into the tax net. People who are already paying tax but who have not paid enough will not get a general amnesty. The person who owes £20,000 VAT each year from 1980 to 1991 will not get a general amnesty or a 15 per cent rate on the VAT which is due. That should be emphasised. Accountants have a duty and a responsibility to themselves and their clients and when this legislation is passed they will have to make sure that the accounts they submit have been properly declared. It is not true that we might not get most of the money we know is out there because the people involved will not be eligible for the 15 per cent rate on, for instance, the PAYE or VAT payments due.

This Bill is an embarrassment to the vast majority of the taxpayers. It is important that we do not aggravate the ordinary person who is being assessed, investigated or audited at this time. Every opportunity should be given to these people who are prepared to pay their taxes but have been charged interest, brought to court or appeared in Stubbs Gazette. These people were embarassed by what happened to them but now we are prepared to ask others to pay only 15 per cent up on the amount owed to 1991. That is an embarrassment to us all and I know that the Minister does not feel good about it either.

Mr. O'Kennedy

Yesterday in Tokyo there was a major international agreement in relation to the freeing of trade between the major international world powers. It was a very historic event and hopefully will give rise to a greater flow of trade, greater liberalisation and a greater degree of propriety among the economies of the world. That type of international co-ordination, co-operation and agreement is very necessary. It is high time the major economies applied what has been achieved in the trade area to their tax procedures and banking practices.

There would be no need for legislation of this kind if certain economies were not based on the fundamental principle that no questions are asked about how people got their money, where it came from, whether they had fulfilled their legal responsibilities or behaved illegally. All that is said is that their transactions will be confidential. It is time we recognised there are economies, such as Switzerland, which have built up a banking system on the basis of not disclosing the sources of money lodged secretly in their accounts. If that were normal behaviour in everyday transactions between people, we would regard it as a heinous offence — that is, a receiver of stolen goods — and it has given rise to a spread of crime, repression, cheating, evasions and unlawfulness around the world. In relation to crime, I do not need to refer to the activities of the dictators of South America and other parts of the world who safely lodge their deposits in Swiss or other banks — no questions asked. Others suffer because there are systems in place in banking procedures around the world that not only allow, but encourage, this practice. Similarly, money normally earned through speculation or well judged investments is being attracted to these centres, which are committed to advancing their selfish economic interests, irrespective of the impact it has on society around the world.

We use nice terms, such as tax havens and tax shelters, to conceal the fact that we are providing a deposit box for funds either illegally made or not fully disclosed to the country in question. It is time for the international order to address that issue as cogently and directly as they did yesterday in the trade area. If they did this we would not have to introduce proposals of this kind to get at funds that should have been declared under our law, that should have been known and disclosed to the Revenue Commissioners and, under the civic responsibilities which every citizen is obliged to meet, that should have been amenable to the normal tax levels. Those in pin striped suits providing these shelters in some of these centres, who are presented as the essence of respectability — I want to refer again to the largest of all, Switzerland — should be told by the international order exactly what they are and the price that is being paid by many people for the promotion of their selfish welfare.

To that extend, I sympathise with any Minister — especially this one — trying to introduce incentives to encourage people to bring back funds deposited abroad in these "havens", "shelters", "on holidays" to where the responsibility for nominating it always lay. That is the first priority and it cannot be achieved overnight, but it gives rise, not only here but in other economies as well, to efforts such as this which, in my view, are inadequate and in many ways inappropriate. I have grave reservations about the purpose and effect of this Bill and the waiver not of all but of certain tax interest and penalties, but I will refer to that later.

I also have serious reservations about the effect of the Bill, to which Senator Cregan referred, on the whole taxation system and the attitude it will generate towards normal and proper compliance with the tax law and the law in general. We would be deluding ourselves — I know this Minister would not do this and I feel it does not represent his enthusiastic approach to how these matters should be managed — if we believed there was no bad feeling among those who work hard, earn their entitlements and pay their tax against those in society who accumulate enormous wealth, not necessarily by work but by speculation, information and sometimes by unlawful manipulation. The reaction of the compliant against the speculator is evident and is causing unacceptable tensions in our society. I am concerned that far from reducing these tensions, this Bill may unwittingly aggravate them and, far from setting a standard of compliance with the law, may set one for evading it, especially when one is rewarded for a wrongdoing, although subject to special requirements, in contrast with the normal tax provisions enacted and imposed on those who have behaved according to the system. I am concerned about the effect this measure will have on the tax law and on the law in general.

Other Senators have said in this House and elsewhere — the Minister has made it clear that it is an important part of the proposal — that no one will contest an incentive to bring back money to our economy to fund much needed employment and social justice programmes but it is ironic that, by doing so, we may be offending and undermining the norm of social justice and public morality.

I want to commend the actions of the Government and this Minister since 1987 in reducing the marginal tax rate, which had been a major disincentive and burden on those who had lawfully earned their money in this State. The way to fund the programmes to which the Minister referred as being of the highest priority is to continue reducing these tax rates. It must be admitted that our tax rates are still too high, although they have been successfully reduced over the last few years from a top rate of approximately 60 per cent to 48 per cent and the standard rate to 27 per cent. This is a major achievement but they are still too high for an economy which is trying to promote incentives for employment and enterprise, and they act as disincentives. Nevertheless, can that justify a tax incentive scheme which is confined to those who have successfully and unlawfully evaded their responsibility under the law and does not, by definition, apply to those who have properly and consistently acted on their responsibility?

There would be spontaneous and unanimous support both here and elsewhere for a proposal to introduce a 15 per cent tax rate for taxpayers who comply with the law and who will continue to do so, subject to whatever scrutiny or supervision is required by the Revenue Commissioners, but this is not feasible given the demands on the fiscal system. Yet a 15 per cent rate is available to those who have evaded or broken the law. This raises the question of fundamental public morality and the effect it will have on the attitude of the people to the State, those who administer this system and those who see themselves as potential beneficiaries of it.

We have inherited an ambigiuous attitude to taxation, an attitude derived, to a large extent, from our inherited attitude to authority, an authority imposed on the people for generations. Although we have been an independent State for over 70 years, that inherited attitude to authority remains. The Revenue Commissioners are not seen to act in our interests. They are the target of our antagonism and are compared to KGB investigators by many people. Whatever we can hide from their observation is fair game.

It is sometimes suggested that the Revenue Commissioners do not represent us but they do. Without their activity and commitment we would not have funds to implement the programmes we call for from time to time. That inherited attitude to taxation promoted the notion that there was no moral sanction attached to tax evasion.

Income tax was once referred to as "a penal tax". Given our experience of penal law, the word "penal" has definite connotations for us. I remember hearing these words used when growing up by the established leaders of the Roman Catholic Church. Some may have had personal reasons for referring to income tax as a penal tax because of conflicts with the authorities in the 1930s when the authorities were determined to set standards for behaviour in society. The notion of a penal tax seemed to justify, if not encourage, tax evasion. It was often said that the only sin in Ireland was a sin against sexual morality. There was no sin against public morality in terms of undermining and evading our obligations as citizens to pay tax.

Taxation law, in particular, must be based on equity and it must be seen to be implemented fairly and fully. What effect will this legislation have if it is seen by some to justify, if not encourage, tax evasion? I hope it will not. Although this legislation applies to tax evasion before 1991, it seems to justify and condone this practice.

There is a distorted representation of tax as a penalty on success and effort rather than a civic responsibility. It is the cause of constant conflict between the citizen and the State. Is there not a risk that this conflict will be aggravated when compliant taxpayers see themselves penalised? I sympathise with Senator Cregan's point about small business people who are subject to scrutiny which causes psychological burdens and pressures.

Compliant taxpayers will see themselves as penalised when tax evaders are rewarded for evasion by paying half or one third the tax paid by compliant taxpayers. This raises the question of public morality at a time of growing disillusionment, disorder and crime. We cannot counter these problems by placing more gardaí on the streets, building more prisons or by reacting. We can counter these problems by building a social order that the public and, particularly, the disadvantaged can respect and feel part of. We cannot counter these problems by encouraging a culture which promotes the evasion of civic responsibility and benefits from "tax shelters", "tax havens" and "tax holidays", phrases which have been dreamed up by those seeking to conceal these matters from the gaze of the community nationally and internationally.

Are those who have found havens, shelters or "holidays" and who enjoyed holidays to be preferred in our law to those who have never evaded, sheltered or "holidayed" outside the taxation system? The answer will determine whether the intention of this Bill can be realised without damaging the taxation system and undermining people's attitude towards that system. This system needs to be improved rather than undermined.

From what I know of the Minister's view, disposition and concern for those in the public service and the deprived, the original provisions in the Bill would not have had the Minister's support. The provisions guaranteeing confidentiality would impose penalties on public servants when dealing with tax evaders. Public servants could be made amenable to criminal sanction if they broke a confidentiality rule. I found that unacceptable and I applaud the Minister for deleting that provision. The inclusion of this provision was not fully considered, it was not deliberate and it would be inequitable if administrators of the law were amenble to penalty when those who had broken the law were being rewarded. It would introduce a new concept. We must recognise that it may be too much to expect that there will not be a deep seated resentment, even now that this provision has been deleted, among those who implement the law against those who, as they see it, will be rewarded for evading it.

Let us reflect for a moment on the effect this may have on those citizens who have worked to discharge their responsibilities in the Office of the Revenue Commissioners. We do not tend to think of them as individuals, we tend to think of them as a repressive bunch of prosecutors and prosecutors, but they are individuals charged with a responsibility and we should respect and support them for what they have to do. Is it not too much to expect that there will be a deep seated resentment among those who respect the law and who have always paid their due taxes as a matter of moral and civic responsibility against those whom they will now see as being rewarded for evading it? That raises a fundamental question.

Normally, the 15 per cent tax rate without penalty or interest might be expected to promote a flood of potential beneficiaries. I do not claim to have inside information on the real situation but I was pleased that under the 1988 amnesty all the money earned was taxable as if it had always been in the tax net and the money collected was far in excess of what any of us expected. Significantly, this amnesty did not offer the incentive of tax rates other than those which would apply had the money always been disclosed and amenable to tax, yet it succeeded. Under this Bill we now have a tax rate of 15 per cent without penalty or interest and while this might normally promote a flood of potential beneficiaries, it remains to be seen if such will be the case, in view of the understandable tension among consistent evaders about the future consequences of their admission of past evasion. One hears in business circles that people who might otherwise contemplate benefiting from this amnesty are not as enthusiastic as might be expected in measuring the benefit of this kind of provision. They are apprehensive that once they disclose their evasion they will be targeted.

I would be surprised if diligent public servants did not exercise extreme diligence in respect of those who disclose under this amnesty that they have evaded their tax liabilities. It would be the duty of those public servants to do so if large sums have been kept outside of the system. I would prefer to see them devote their limited resources to such people than to small businesses, corner shops and people who are trying to make an honest living and who, from time to time, fall behind when it comes to paying their taxes.

It is important that this law is kept under constant review, as to its effect on the taxation system generally and public morality and the attitude of hitherto law abiding citizens to the State and to the law. Whatever funds were to flow back from the tax amnesty, they would be very dearly purchased if they were to undermine not only our taxation system but also the authority of the law in general and the attitude towards the law of people who have been consistently law abiding.

In relation to the penalties being imposed in the Bill, although I am much more interested in promoting positive attitudes in society than in imposing penalties when the rule of law is not complied with, the reality is that our current system of administration of the criminal law is totally inadequate. I do not blame any one group for this. It has been the consistent failure of successive Administrations, of which I was part for some time, to recognise that we must provide adequate prison accommodation for those who have been sentenced to imprisonment. We have not done that because it was not a priority in terms of public expenditure allocations when so many other needs were competing — industry, agriculture, employment generation, education, health, and social welfare. It must be acknowledged that adequate prison accommodation for those who breach the law has not been provided.

When people are sentenced, they must immediately be sent to prison and the resources must be there to allow this to happen. Even now, our court system is being undermined because accommodation is not available for those who are convicted of breaking the law. If we now impose major penalties by way of imprisonment in addition to fines on those who are found to give false information under this tax amnesty, how can we pretend we will have no difficulty accommodating them? Where will we find the space? Who will vacate the premises to make way for them? These questions would remain even if we could enthusiastically endorse this Bill.

I wish the Bill well in terms of the money that will be provided for the necessary programmes for development in our economy. I have grave reservations about the manner in which it sets about doing this and I hope the Minister and his officials will keep a beady eye on the effect this amnesty will have on our tax system generally, on compliance with that system, and on the general respect for law and order in our society.

Mr. Howard

Senator O'Kennedy made many points, and some of them he developed in a very interesting way. Many arguments have been put forward about this legislation and many criticisms have been made. However, I do not propose to rehash all the criticisms made to date. I will confine my observations to this point.

In common with many others, I have a fundamental objection to it as a piece of legislation. Basically, it rewards those who have successfully avoided or evaded paying their proper share of taxes. As Senator O'Kennedy and Senator Cregan have said, it is perceived as being unjust by all complying taxpayers, particularly those who have struggled year in and year out to meet their obligations. An attitude of resentment has built up and there is no doubt that, in view of what is proposed, taxpayers will feel penalised, unjustly treated and that they have been made to look foolish. Beyond these general observations I do not propose to develop the various arguments that have been made against it. However, there are one or two points I would like to take up.

The Minister is on record both outside the House and in the other House as saying that this is a last chance for the non-compliant taxpayers at whom this measure is aimed. This is their last chance, the last amnesty, their last opportunity to put themselves right. Frankly, I do not believe him. The 1988 amnesty was supposed to be the last chance and it yielded something like £500 million. Although nobody knows for sure, sums of £200 million or £300 million have been mentioned as estimates of the yield from the proposed amnesty. Assurances were advanced in 1988 that that amnesty was the last and only opportunity non-compliant taxpayers had of getting themselves in order. The same argument is being advanced again today. Once it is seen that there is more money to be brought into the tax net, a way of providing another amnesty three, four or five years down the road will certainly be found.

It has never been my position to question the words of Ministers or Governments. I have always believed we should try to protect the profession to which we belong by preserving its credibility. However, I do not believe the Minister's assurance that there will not be another amnesty a few years down the road, because when the prize to be collected is large enough, it will attract the interest of the Minister or his successor. I say that because of similar assurances given in 1988.

However, there is another reason I do not accept the assurance at this stage. The events of the last few days have shown that there is little credibility attached to solemn assurances from either Ministers or Governments. Eight months ago, a Cabinet of which the Minister was a member as Minister for Finance, gave a solemn assurance to the people of my area that the status of Shannon would be preserved. That solemn assurance has been reneged on. If the Government can renege on a solemn assurance about such a straighforward issue, it can easily, and very likely will, renege on this issue as well. I do not believe the assurances being given on this issue are any more believable than the assurances given to me and the people of my area last October.

I want to return to the type of tax evaders we are talking about because of the comments made by Senators Cregan and O'Kennedy. There are different classes of evader. There are those who have managed to move the money earned in fairly legitimate business operations, often after long hours of hard work. In a sense, if the amnesty was confined to these people I would not have a major problem with it; I would take a fifty-fifty attitude to it. The problem I have with the amnesty is that it is open to all classes and provides cover where the proceeds of illegal gains can be legally brought back into the system. These include the proceeds of crime and drugs. In his speech the Minister stated:

Neither is the incentive scheme available to individuals with undisclosed or undischarged liabilities deriving from an illegal source or activity.

The simple question is, how will you know? There is the question of confidentiality which the special collectors are obliged to observe. The position, as I see it, under the scheme the Minister is proposing, is that if the cash is declared and provided then all that will be required is a statement from the person owning the cash that it was acquired through legal or legitimate transactions. The opportunity will thus exist for laundering the proceeds of illegal gains. I am sure we will be arguing about this on the next Stage and the Minister will respond.

In his Dáil speech the Minister also referred to the fact that he expected small business operators would constitute a fairly sizeable proportion of those availing of this amnesty. I find that disappointing, particularly on a day when we read in the morning papers about the massive scam that took place in Telecom Éireann. It was part of a sequence of events that included other well known State bodies like Greencore. A limited number of privileged people appear to make vast sums out of these transactions with apparent ease, yet the Revenue Commissioners and the Department feel the focus in this Bill should be on the small business operator. It is a regrettable attitude and reflects a regrettable performance on the part of those charged with policing tax compliance in the State. The privileged, able operators can get away with massive sums while the small business person is an easy object to be hounded at every occasion. At present small businesses are well policed. Tax clearance certificates have been introduced for more categories and that has taken care of many tax avoidance problems.

I wish to focus — and Senator O'Kennedy mentioned this point — on the mentality that officialdom creates among the self-employed and small business operators. Very small businesses operated by one person, for example, crafts persons, trades persons, one person haulage operations, farmers, dealers — whether in commercial items or livestock — are almost always paid in cash. These people are affected by the attitude of legislators to them and the environment created by that attitude. What is common to that category of people is the fact that they work long hours, many do heavy physical work and they work at unsocial times. They are like us in that we are about the only other category of people who work long and unsocial hours. We work hours that many of our constituents would not dream of working. The Minister understands the situation of these people.

Despite the fact that their income is earned from heavy physical work during long and unsocial hours, these people feel that if they disclose part of their earnings the State is waiting to grab at least half of it from them. Senator O'Kennedy used a good word when he described their attitude as one of resentment. Resentment is felt by those people and as a result they hide what they can. It is a fact of life. They will be chased for the money and eventually it will be taken from most of them. Their sin is a venial one compared with the events reported in this morning's newspapers and, indeed, matters that concern another institution now winding down its operations in Kilmainham. The people involved in those activities really undermine and damage the system.

It is always easier to hound the small operator. They are easy prey. Many of them are also risk takers. They have gambled with their business and they have stood to lose everything. Many see their neighbours working in a nine to five job enjoying a better lifestyle, yet in their contacts with officialdom they are too often confronted with envy and suspicion. They are rarely offered encouragement. There is no recognition of their talents or the risks they take or the contribution they could make to a better society. Small operators are individuals; no organisation represents them. If they had such an organisation there would be proposals on the Minister's desk requesting that the income from heavy physical work over long and unsocial hours be subject to a more liberal tax regime than work within normal hours. That is an idea the Minister should consider for his next budget. I echo Senator O'Kennedy's sentiments when he spoke of the profits from speculation and manipulation and the ease with which they are often hidden to the disadvantage of all concerned while profits within the State often appear to be easier prey.

There are so many exclusions to the amnesty that I question the effectiveness of the exercise. Amounts that were subject to investigation or inquiry by the Revenue in respect of tax liability for the period to 5 April 1991 are excluded. Revenue computers constantly issue demands or letters months after settlements have been made. Is one of these random inquiries or Bills enough to suggest that there is an investigation? I see the Minister shaking his head so I will accept that. Another exclusion refers to tax already at enforcement stage on 25 May last and covers cases with the sheriff. Many cases which are already settled are with the sheriff.

Other exclusions are cases where court proceedings have been initiated, cases which are the subject of a notice of attachment, tax which on that date was under appeal, tax which on that date had been agreed with a tax inspector but had yet to be paid, tax not paid by virtue of an avoidance scheme which would otherwise have been payable on 25 May — there are seven or eight exclusions. I wonder, when account is taken of these exclusions, how large the balance will be.

I have often been critical of the Revenue Commissioners in their dealings with business people and I have not changed my opinion. There is an urgent need for them to update their image or to improve their public face. I will give a relevant example and I ask the Minister to look into this case; I will provide him with the details later. A married man, a man from my county decided to return after 25 years in the UK; he is in his midfifties. He bought a house in my town after some difficulty disposing of his own house in the UK. He is a tradesman and eventually found a job as a general handyman. He returned last May and asked me to inquire from Revenue about importing his car and the van he uses for his work. I received the information that there is no difficulty in the case of a permanent change of residence. I relayed that information in good faith and advised him to go to the Revenue office, which he did.

This man is a compliant taxpayer who will live here. His earnings will be subject to tax in the normal way. The van was put through for £40 but the car was seized. To release it cost him £1,000 and there is also £1,880 duty payable on it. This is a man who, on advice given by me in good faith, rang the Revenue Commissioners with the relevant data. That is the experience of a compliant man attempting to deal with the Revenue Commissioners. I think that is a shocking experience but unfortunately it is similar to the experiences many people have in dealing with the Revenue Commissioners. There is an urgent need for them to update their public image. This would eliminate all the resentment about which Senator O'Kennedy spoke and it would lead to a healthier situation.

I am glad to have had the opportunity to make these observations and that the Minister was here to listen to these points. I raised that last matter as an example and if the Minister wishes, I will forward the details to him.

Mr. Calnan

I welcome the Minister to this House. Nobody likes paying tax. Amnesties, present and past, have made the PAYE sector angry, and rightly so, because some employers of PAYE workers are tax dodgers. I specifically want to mention a group who are working hard at the moment — those correcting exam papers. I did it for many years until last year. It is disheartening to realise that after three long days on this tiring and responsible job after taxation one will only be paid for only two days' work.

People who in the past had money to invest will now only pay 15 per cent tax. This is difficult to accept because people are paying 27 per cent at the lower rate and 48 per cent at the higher rate, the 1 per cent employment levy, the 1 per cent special levy and sometimes 7.75 per cent PRSI, are sizeable amounts. Many of these people are angry about the amnesty. This money has left the country and if we had the ideal tax system, the amnesty would not be necessary because the taxes would have been collected. We are now in a difficult position because of mistakes made in the past. In these days when we need to create employment, more people are required in the tax offices and on the ground to rectify the situation now and for the future to ensure that amnesties will not be necessary.

I am glad the Minister has taken into account people who failed to pay not PAYE and PRSI due by themselves but who failed to pay PAYE, PRSI, levies and VAT due from their employees and customers to the Collector General. This money should be paid immediately. Some people have spoken about another amnesty and some think one amnesty is a continuation of another. I see the two amnesties as dealing with two separate issues. I would not like to say there would not be an amnesty in the future on another aspect, but I would not like to see further amnesties on the same aspect.

Mr. Howard

But there will be.

Mr. Calnan

This proposed amnesty is not a continuation of the last one; they are two separate amnesties. If an amnesty is necessary in the future in another area, I might support it if I felt it would do good.

There are certain people in this country who feel that their wealth and self-styled status bestows on them an almost God-given exemption from paying taxes and duties while the rest of us must pay. I do not think that is right and it is time these people were treated like the majority of the population. In our neighbouring country, the UK, people of prominent standing must face the rigours of the law. Some people in this country believe their wealth gives them immunity with regard to taxation.

Let us look at people with a gross income of £18,000 a year, which seems a large sum — up to £360 a week. However, when that person has paid taxes, their income might be £12,000. These people are precluded from applying for a higher education grant for their family because of their gross income, yet the family of the tax dodger who, with his helpers, has manufactured figures and put money away in safe havens, can get higher education at the expense of the ordinary taxpayer. That is wrong and the more taxation loopholes we can close forever the better.

During the debate speakers mentioned that there are many accounts held in this country — nearly four times the population. I would not be worried about that because some people, and many old people I know, like to have money in the post office for a certain purpose, money in the bank and money in the building society. I do not see anything wrong with that. We should be careful when it comes to counting these accounts because that has been the practice in this country for a long time.

In the 1960s and 1970s the tax laws allowed many people to stay outside the tax net. I am dwelling on this because I think it is the reason we are introducing this amnesty. Many of these people in the late 1970s and early 1980s before approaching the Revenue Commissioners, or before being approached, made inquiries and found that huge sums were being demanded and they decided to remain in hiding. That has led to the present situation. Our mistakes in the past in not having proper taxation control have led to the introduction of this amnesty. People intentionally set out to dodge paying their taxes and the money was hidden.

Unfortunately over the years, many little shops which provided a valuable social amenity for people in rural areas have closed down due to the tax situation coupled with the rates. It is much easier for people to close their doors and say they will no longer have to deal with the VAT inspector and rate collector and the shop is then converted back to a house. It is a pity to see that happening and I would like the situation to be examined to see if these people could be encouraged to continue providing these social facilities.

As I said money is hidden at home and abroad. There is undeclared income and, no doubt, there is interest on this income. There are also under-declared moneys. I am glad the amnesty will apply to individuals and not to companies. I want the Minister to clarify the situation regarding 1994 because rumour has it, and I have heard it from a number of people, that the checking of taxes and income may be on an EC rather than national basis after 1994. As I said, moneys are invested in this country which is as much a tax haven as other countries. Those people who earn good money and disregard their country by investing it abroad are not responsible citizens. Their money should be at work in the country where they earn their bread and butter.

There are many in this country who invest their small savings with their local credit union — I cannot lay enough stress on the importance of the credit union movement which has got many people out of the hands of speculators and moneylenders. We also have savings certificates and other tax free facilities which are of benefit to the country. It is good to see these systems being used and the more they are advertised the better.

I want to talk about the amnesty again. If the amnesty brings £100,000 into the State kitty it can be put to use and if it brings in £100 million, that will be better still. The money can be used by the Minister for Finance and other Departments to get rid of the 1 per cent levy, for housing, for health or to provide better educational facilities. It will be worth introducing the amnesty for that reason.

I want to bring the Minister's attention to another point I made previously in this House — if tax concessions on services are granted the person providing the service has to produce a receipt. These receipts could be used to establish tax liability. Too much cash is handed over the counter without receipts being kept.

Confidentiality is of the utmost importance because without it no money will come back. We have to be realistic, there is no other way of getting the money back into the country, or back into use, as some of it is actually hidden here. Without confidentiality the money will rest in the tax havens and it will be lost to the taxpayers, health and education.

Nobody knows yet how much money is out there or how many people will avail of the amnesty and what the benefit to the country will be. I always question amnesties because it means some wrong is being forgiven. Let us hope this amnesty will benefit the people who are paying more than their fair share of taxes. The amnesty is the best of a bad choice, and I thank the Minister for coming here to recommend it.

Mr. D'Arcy

I welcome the Minister to the House. I have been seeking his presence here for some time, not just in relation to this amnesty but on what could be described as related matters and I ask for the Chair's indulgence in allowing me to do so.

This Bill could be described as unusual. Although, some say this is our second amnesty, I claim the 1988 amnesty was completely different from this one. The tone adopted throughout the debate on the tax amnesty, both inside and outside the Dáil, and by the Minister, is not calculated to encourage future interest rate reductions. By making threatening comments about getting access to banks and building societies, I have no doubt that the Minister will frighten off present and prospective savers with these institutions. These savers could have perfectly legitimate deposits but the threat of the absence of confidentiality could cause a run on deposits in the financial institutions. Money never had any home and will always go to the safest one offered, whether it be inside or outside the State. By his attitude and actions, I am sorry to say, the Minister for Finance will cause a flow of funds out of Ireland over the next six to eight months. As he knows too well, this is damaging to the retention of low interest rates.

I never have been and never will be a protector of the financial institutions because I have not been impressed by their policies over the years. For the six month period from September until the end of March the majority of financial institutions were very harsh on a large number of people. We find that repeated requests by the Minister — and I must give him credit for it — to reduce their interest rates have to a large extent fallen on deaf ears. These financial institutions are still charging current and long term borrowers in the region of 12 to 14.5 per cent. The Minister should continue his efforts in view of the fact that the deposit rates are, in some cases, as low as 2 or 3 per cent and the majority of borrowers should be enjoying interest rates of between 10.5 and 11 per cent. There is nothing more damaging to the economy than high interest rates. We had interest rates of 16, 18 and 20 per cent, with additional penalties, until the end of March — and in some cases the end of April — which have done terrible damage.

People are asking about cash flows. There is a lot of competition for mortgages, particularly among the building societies, but some of it is only gimmickry. One is offering 6.5 per cent for the first year but it will not tell you what will happen in the second year; others are offering 9.5 per cent. I understand that overnight money is costing in the region of 6 per cent, yet the financial institutions' interest rates, including those of the ACC which is controlled by the Minister — and I checked their rates this morning — are still in the 13.5 per cent bracket. That is ridiculous in an environment where money is coming cheaply into the economy — and I am delighted to see money coming in. It will do more good if sustained for the next five or six years keeping interest rates down than any amnesty the Minister may bring in. However, I am nervous about the question of confidentiality in respect of financial institutions.

If the Minister believes there will be a bonanza in the form of a rapid and large influx of funds due to the proposed amnesty, he does not understand human nature. The last amnesty differs from the current proposals in that the requirement now is to disclose accumulated capital, not to make outstanding liabilities current without penalties. The last amnesty brought numerous taxpayers up to date, some of whom had up to five years liability. We got a good response to the 1988 amnesty because farmers and business people were not charged interest or penalties and we got an inflow of about £500 million.

No doubt the Minister and all Members of this House are being asked about the new amnesty. It is completely different to the previous one. I am subject to correction on this point, but I believe practically all the money that came to the Exchequer from the last amnesty was within the State; there was no return from outside. The people the Minister knows to have money outside the country should be honest with him. They will not bring back the undisclosed capital. The fine statements to the effect that this is a once off 15 per cent concession to which no further penalties will apply is not sufficient bait to tempt the targeted taxpayer to repatriate his capital.

In discussing section 8 this morning, the Minister said:

any payments made to the chief special collector will be payable to the Revenue Commissioners and lodged confidentially, along with all other payments to the commissioners, in their general account in the Central Bank.

What will happen to these taxpayers in the 1993-94 accounting year? The money can be lodged in the Central Bank's account and confidentiality can be assured there, but the taxpayers will have to include this money in their accounts for the current year. The Revenue Commissioners will than ask where this money came from and discover it was from the tax amnesty. The confidentiality is then finished for both tax inspectors and taxpayers. The inspector will insist on identifying where the money came from and receiving all other information about it. The taxpayer concerned will get a certificate for 12 months and from that point on, the taxpayer must disclose the source of the money.

Section 11 relates to offences committed on or after the passing of this Bill. The Minister claimed he will be looking at those giving advice to the taxpayer, such as bank managers, accountants and financial advisers. If it is disclosed that any such person gave misleading information in respect of a taxpayer after the amnesty he or she will be subject to severe penalties. That has serious implications for the taxpayer and his advisers. They will not be prepared to condemn themselves, and they cannot be blamed for that. On the one hand, confidentiality is promised and on the other, if any misleading information is uncovered those people face serious charges from the Revenue Commissioners. The commissioners will be extremely curious about these sources of capital. It will be immaterial that they were derived from savings after tax or from tax profits.

From then on, these taxpayers will have a difficult relationship with the Revenue Commissioners. I am not criticising the commissioners, they have a job to do. By and large, if one is fair with them they will be fair with you. The Minister must accept that mistakes are made. Omissions may occur in some returns, as has happened and will always happen. If this money comes in it will appear unexpectedly in a taxpayer's returns for 1993-94. What question will the Revenue Commissioners ask this taxpayer and his advisers?

People have asked me about the amnesty, some have given their names and some have not. I have told them I could not answer but I would ask the Minister in the Seanad what will happen. I usually do not take telephone calls if the caller refuses to give his or her name. However, this morning I got a call from a man with a Wexford accent who told me he had £250,000 outside the country. I asked how he had moved it there. He said he had paid his DIRT through banks and building societies. He asked me a simple question: if he brought the money back and it is mentioned in the 1993-94 accounts, and if he pays the 15 per cent charge, would Revenue examine his accounts for the last five years? He said he had taken the money out of the country over a five year period but had paid DIRT. Will that man have to disclose to the Revenue in the 1993-94 accounts the source of that £250,000 and will he have to pay back taxes on it? He said half the money would be taken if it was taxed. I told him his actions were illegal but he said he was only one of thousands who had done this. I would like the Minister to answer my questions on that issue.

Apart from the above considerations, this tax amnesty displays the depth of the Government's need for cash. It has sought money not alone outside the country but from many other sectors. It is providing an amnesty for tax evasion by people drawing the dole even where employers are involved. It is an act of desperation.

Tax inspectors feel they are doing reasonably well but they need three to four years and more staff to deal with the current problems of tax evasion and avoidance. The Minister is in a better position to judge than I, but this has been said to me and no doubt to him also. I will not disclose the names of the senior officers who spoke to me but they claim if they had been allowed another two to three years to do their work, they would have caught most of those with money outside the country. They also claim they do not have sufficient staff to audit taxpayers. If that is true, the Minister has an alternative. I hope he gets the money he is seeking. However most people seem to think those with money outside the country will be reluctant to bring it back for the reasons I have given.

There are many honest taxpayers who conscientiously pay their tax each year. One of them contacted me in Gorey, County Wexford, and told me he was audited by the Revenue Commissioners. The audit took four days. He employs approximately 24 people. The tax inspectors who were carrying out the audit analysed every detail. He said he did not sleep for the four nights in case the inspectors found something for which he would have to pay a bill amounting to £15,000 or £20,000. He could not afford to pay an accountant, but a well qualified person did his accounts. However, the tax inspectors came back at the end of three weeks and gave him a bill for £2,500. He was happy to write a cheque for this amount. However, he said he would have been in a difficult situation if he had been forced to write a cheque for £30,000. This man is honest and he is paying his staff. He is not pleased that people who can cream off money and take it outside the country are now getting an amnesty of 15 per cent. This man told me that some of this money could have been outside the country for 20 years. He is not pleased that the tax amnesty is allowing people to bring back their money and paying such a small penalty.

A large majority of honest taxpayers are displeased with what the Minister has announced today. They feel that he should have given Revenue more staff to allow them carry out audits. Some of those who are creaming off money and taking it outside the country are well known to the Revenue Commissioners.

I wish the Minister well with his tax amnesty. The 1988 tax amnesty brought in £500 million. I fear that the people who creamed off the money and invested it outside the State will not bring it back. In view of the terms of this Bill, if the Minister cannot clarify the position of the inspector of taxes in four or five years time as regards this money being reintroduced into bank accounts in 1993, I fear the amnesty will be a failure.

Mr. Fahey

I welcome the Minister to the House. I also welcome this Bill because it is one of the most enlightened pieces of legislation which has come before the Oireachtas in recent years and I am surprised at the bitter opposition from certain individuals and parties to it.

We have a great ability to ignore reality and to pontificate about what might have been or what we would like to see. We have had examples of this in the debates in the Dáil and I am glad it has not occurred in the Seanad. We must look at the reality in relation to the payment of taxes. The ethos over the years has been that one does not pay the Government unless one has to. The PAYE worker is caught because he does not have a choice. However, the ethos of people in business, irrespective of what type of business, is that one pays as little as possible to the Government. That is a sweeping statement and while I accept that it does not apply to everyone, it is true for the vast majority of people.

How many people in the House today were prepared to pay the high level of tax, 60 per cent or whatever it was, to the Revenue Commissioners? How many people will answer that question honestly? We all know that people were creaming off a certain amount of profits and not paying tax. We all know people who were in a position to do so, and I am not talking about big business people. People were putting money into building societies or foreign banks to avoid paying the tax they owed. We must recognise that people were creaming off a certain amount of money when tax levels were high. That is why I was shocked to hear certain people in the Dáil bitterly criticise this legislation. This legislation faces the reality that there are billions of pounds outside this country which people stashed away in order to avoid paying tax.

I was more than disappointed at the righteous indignation expressed by a number of the Progressive Democrat Deputies, including Deputy O'Malley, Deputy McDowell and Deputy Cox. One would have to accept from what they were saying that there has not been widespread tax evasion in this country over the last number of years. One would have to accept that we are a nation whiter than white when it comes to paying tax. However, the reality is different. If one considers Deputy McDowell's profession the reality is that many——

Acting Chairman (Mr. McDonagh)

As Deputy McDowell is not present to defend himself, could you confine yourself to the business before the House?

Mr. Fahey

——people in the legal profession did not pay their fair share of tax over the years. These people will pay under this amnesty, as they did under the last one. The legislation is an enlightened effort on the part of the Minister and the Department of Finance to bring money back into the tax net which would have remained outside the State. I cannot understand how anyone could criticise this legislation.

We all agree the issue of fairness is brought into question. There is no reason a person who failed to pay their taxes cannot be given a chance to pay. There is no point leaving £2 billion outside this country, where it is of no benefit to the country, if we can bring it back into the State. For that reason, I compliment the Minister for Finance for introducing the special 15 per cent amnesty. It is an imaginative attempt to induce persons who have undisclosed pre-1991 tax liabilities to come forward, to pay that money and to be compliant from 1992-93 onwards. I believe many people, other than those who have millions of pounds, will come forward. I also believe that a considerable number of people who have small amounts of money — £10,000 or £50,000 — outside this country will now bring it back.

As far as I am aware, the answer to Senator D'Arcy's question to the Minister is that these people will not be questioned by the Revenue Commissioners on their 1993 or subsequent accounts. The Minister's speech clearly outlines that there is a confidential collection system and that these people will not be questioned by Revenue once the money is returned. The Minister shows how the confidential repayment of the money can be adhered to. This legislation is impressive in this regard. It is imaginative legislation which faces up to reality.

The area of tax payments is one where we need to call a spade a spade. We all have friends. Senator Honan, an accountant, knows that most business people have been creaming off extra profits. This is an opportunity, once and for all, to leave the bad old days behind and to get everybody to pay a fair and equitable amount of tax. Everybody paying their fair share means everybody will pay less. That is the point I want to make. The Minister will get a significant amount of money from this amnesty. If he wants to be fair to all he must reduce the existing levels of taxation much more quickly. If everyone pays their share the Exchequer will get more tax as a result of this initiative, and I am convinced it the figure will be higher than the £500 million got in 1988. It will be interesting to see if the comments that people outside the country are not going to bring their money back will be borne out. This initiative will encourage people to bring their money back into the country.

A major problem in previous years has been our regressive tax system. It is hardly surprising that small business people who are finding it extremely difficult to make ends meet would attempt to evade a portion of their tax bill because of the high level of taxation they had to pay in the past. We have had a regressive system of taxation but the time is now right for a more progressive approach. While the Minister is constrained by budgetary requirements, I am convinced that we have gone beyond the point of diminishing marginal returns with regard to tax revenue. Now that we are approaching a new era where people will start to pay their fair share of tax, the Minister has an ideal opportunity to bring forward more progressive levels of taxation than we have seen to date.

It will take courage on his part. He will have to argue vehemently with his officials who never appear — and this is my one criticism of them — to accept the principle of diminishing marginal returns. Lower levels of taxation will bring in larger amounts of tax revenue. If the Minister, following on this initiative, reduces tax levels in specific areas the concept of diminishing marginal returns comes into play and he will realise that he can get more tax if we have more realistic tax levels.

The second element of this amnesty, the general amnesty, is a welcome development because, as was proved in 1988, the real problem for people who have difficulty paying tax arrears is interest and penalties piled on top of the tax due. The 1988 amnesty proved that people are prepared to pay their fair share of tax but many businesses simply were not able to pay their tax and they got into further difficulty because they were unable to pay the interest and penalties which had accumulated.

There is no doubt that with recession of the last few years many companies have not been able to make the tax payments that were legitimately due. Consequently, many of them would go into liquidation were it not for the general amnesty provided in this Bill. A significant amount of money will be collected by the Revenue Commissioners before 1 January 1994 as a result of this general amnesty. I will give one example from the many known to me. A company representative employed by an English firm was paid in lump sums and he was required to make his own tax returns. He made his tax returns but when the interest and penalties were added, the tax liability was double the initial amount due. That person was not in a position to pay the double the amount. He will now be able to pay the amount that was due, albeit four or five years after he should have paid it, but he would never have been able to pay the amount due to the Revenue Commissioners taking into account interest and penalties. The general amnesty will now give those who are in arrears and who have had difficulty getting their affairs in order an opportunity to start again with a clean sheet.

It is necessary to have penalties of the severity outlined in this legislation. These penalties will be a preventative measure. What we must do is get away from the ethos I spoke about at the outset, which is a general belief that you only pay the Government what you have to. That belief is endemic in our society and it is necessary that we have the range of heavy penalties which are outlined in this legislation to show people that the Government and the Revenue Commissioners are serious in their determination to penalise those who are not prepared to play by the rules from here on in.

Over the years the Revenue Commissioners were in no position to go after people who were not paying their fair share of tax because they did not have the organisation, the manpower or the resources. I agree with the last speaker that it is now important that the manpower and resources be given to the Revenue Commissioners so that they can ensure that fair payment of tax is being made right across the board.

I wish to refer again to the incentive amnesty of 15 per cent. One of the previous speakers mentioned that the law and the attitude to the law were being undermined by the introduction of this measure. For the first time we are recognising reality in law with this measure. We are recognising that until now the law has been ignored left, right and centre by people who were not prepared to pay their tax but put their money into building society accounts or overseas bank accounts. I am pleased about this because at a meeting of the Oireachtas Joint Committee on Employment we had a number of officials from the Revenue Commissioners present, including the Secretary of the Department of Finance and the view of the Department on that occasion was that it would never agree to an incentive amnesty of this nature because, as they told us, it was morally wrong to take money out of the country in the first instance and consequently we should not allow that money to come back in.

There is a need for fundamental change in the way the country is governed if we are to solve our economic problems. That senior officials talk in those terms in this day and age is part of the reason the country is in its present financial difficulties. This legislation faces up to the reality that significant amounts of money have been hidden away over the years. It now provides an opportunity to legitimise that money, to bring it back into the formal economy and to put it to good use.

While I am critical of the Finance officials in that respect, let me put on record that were it not for those same officials who led us to take the hard measures that have been introduced in the last number of years, our economy would not be in its present good position. I have the utmost respect and praise for officials in the Department of Finance because of the leadership they gave, starting with Mr. MacSharry, on the need for financial rectitude.

However, I find some of the attitudes among these officials difficult to understand, for example, their attitude to the incentive amnesty. We can turn a blind eye to what goes on in this country but we will never solve our problems. We all know the black economy is rampant and that people everywhere have been prepared to ignore the payment of tax whenever possible.

That is the ethos of the Irish people and this legislation is the first attempt to deal with it. As the Minister advised, there is a carrot and stick in the legislation. The carrot is paying a 15 per cent levy and becoming compliant from 1992-93 onwards and the stick is a strict set of penalties which will deal effectively with every person who is not prepared to behave fairly from here on.

This is enlightened legislation and I welcome it. I hope the earlier problems the Minister and his officials had with the legislation will quickly disappear when its success becomes apparent over the coming months. When the Minister sees that success I ask him to continue to introduce more imaginative legislation in the area of taxation and to end the regressive forms of existing taxation which have destroyed the country over the years. The Minister should take his courage in his hand and introduce progressive legislation with proper tax levels which will ultimately yield more money than has been received to date.

Ms Honan

I welcome the Minister to the House.

I have listened with interest to the contribution by Senator Fahey, I am surprised at some of the words he used. The Senator believes that this legislation is "enlightened" and "imaginative". I would not choose such words as I believe the legislation is bankrupt in terms of social justice.

Like my colleagues in the Dáil, I oppose this Bill because it is unfair and unprincipled. It destroys the whole concept of equity between the compliant taxpayer on the one hand and those who have cheated the system through the years on the other.

Senator Fahey spoke of the Minister facing up to reality and of the need to accept the ethos that exists in this country. He appears to believe that there is an ethos whereby it is accepted that one gets as much as possible from the Government while paying as little as possible. If that is accepted by society it is because politicians have expected people to accept such standards. We as politicians must set standards and values and we must demonstrate that it is not acceptable to cheat.

Senator Fahey referred to my colleagues in the Dáil and spoke of them holding the view that everything is whiter than white. There are compliant taxpayers who are whiter than white and it is these people the Government is now effectively designating as foolish while those who were non-compliant are the people the Government is seeking to accommodate. I do not believe these are the kind of standards and values we want our people to have.

Mr. Fahey

Many of these people are key supporters of the Senator's party and of my own party.

Ms Honan

The Senator spoke of Deputy McDowell being a member of a profession that would benefit from this money. Deputy McDowell is well able to defend himself. However, let me say that I do not believe he is like that. Senator Fahey is tarnishing him with the same brush as many others in his profession and says he is doing what they are doing.

Mr. Fahey

I did not say that.

Ms Honan

That is an outrageous suggestion. As politicians, we are supposed to be the leaders in this country and we must decide on the standards and values that pertain here.

At present people know that by evading their taxes the Government will sort out their problems every few years, enabling them to repatriate their money. Senator Calnan spoke of small shop keepers closing down and said that people who sent money abroad were not being responsible. They certainly were not responsible people yet these are the very people, it is proposed, we should take responsibility for and——

Acting Chairman (Mr. Fitzgerald)

I ask the Senator to address her remarks through the Chair.

Ms Honan

——that we should accommodate. By rewarding cheats and those who avoid tax, this amnesty is effectively telling people that crime does pay in this country.

Those people who paid their taxes and complied with the law are feeling betrayed. Many Senators spoke about the Revenue Commissioners. I recently spoke to an inspector of taxes who had been on several VAT inspections. He told me that when Revenue looked for money the people referred to the beef tribunal and the fact that many people were successfully evading their liabilities. However, once the amnesty was announced these people asked why are these evaders not been pursued. The inspector said that it was difficult to answer such questions and if he was in their position he would probably be asking the same questions. This kind of measure decreases the morale of the staff of the Revenue Commissioners.

It is accepted that large amounts of money were brought in under the 1988 amnesty. However, that was a different kind of amnesty. The people who benefited were already in the system. They were bringing their affairs up to date and they had to pay the extra tax due. They did avoid having to pay the penalties and the interest which many felt to be punitive. However, the proposed incentive amnesty is completely different. Those who were brought into the tax net under the 1988 amnesty have, I believe, been compliant. By contrast, the kinds of people this amnesty is targeting, those who sent abroad large amounts of money, will not bring their money back. Such people have no consideration for the good of the country. By saying we have an ethos which accepts this — as Senator Fahey said — we are enforcing a way of thinking that it is acceptable to send money abroad. If those people do send their money abroad, why should they bring it back? They have already thumbed their noses at us and they will continue to do so.

The general amnesty which will enable people to bring their affairs up to date is welcome. However, I cannot accept the incentive amnesty. We have standards — such as integrity, trust, equity and ordinary decency — which I believe should be upheld.

Senator Fahey spoke of the Revenue Commissioners and said people who took money out of the country were morally wrong. How then can it be acceptable to let them bring this money back at a special tax rate of 15 per cent? The Senator spoke of the need for a fundamental change in the way the country is governed. I believe there is need for such change but, not this kind of change.

Mr. Fahey

It is introducing honesty and integrity.

Ms Honan

It is not introducing honesty and integrity; it is rewarding people who are dishonest. A general amnesty is a different matter. However, this incentive amnesty is not introducing honesty and integrity into the system; it is doing the opposite. We consider ourselves to be a republic and one of the major principles of a republic is equality before the law. This amnesty makes a mockery of that principle.

I am unable to understand how the Labour Party can accept this amnesty. Throughout the entire general election campaign last year it preached that it was going to reintroduce justice into economics. If this is the Labour Party's concept of justice I do not know what to expect from it on other issues. The public are outraged and they have shown in opinion polls that they do not support this amnesty. They have every right to be outraged. If we want to set standards for the public and if we want to let them know what is and is not acceptable, we should not accept this amnesty.

Some of the Deputies in my party to whom the Senator referred are people who, down the years, have paid their taxes, and some of them had to borrow to pay their taxes. They feel very hurt by this, like many ordinary people out there. They are now effectively being told that they were the fools, and society is treating them like fools. The wise people were those who thumbed their noses at the law, took the money out of the country and are now getting an opportunity to bring it back.

There is a general perception that if one is well off and has enough money, one will get away with murder. The Glackin report was published this morning. These people made a £4.5 million profit out of the public purse. They took it abroad and now they can avail of this 15 per cent amnesty. The public are already outraged at what has happened in this case but these people can now avail of this facility to bring this money back to this country. This is not something with which I would like to be associated and I cannot for the life of me think how any other Member would either.

Most of the points about this amnesty have already been well documented in this House and in the other House. I am totally opposed to it and nothing Senator Fahey or the Minister has said has caused me to change my mind.

Mr. Lanigan

I welcome the Minister to the House. I do not agree with Senator Honan. There is no doubt that taxation is an emotive issue and every section of society feels it is the one that pays most. Comparisons are made between the percentage paid by one section and another. In general people who are taxable pay tax. There will always be a number of people who will try to fiddle the tax system and this Bill or any other Bill will not stop that. There is no section of society that does not try to minimise the amount of tax it pays or maximise the ways of not paying tax.

I would not agree with statements that everybody whose tax is not up to date, whether it be an individual or a company, is a crook. At least 90 per cent of the people who are in arrears are honest, decent people and are in arrears because of problems in their business or personal relations with accountants, etc. There are, however, a number of people who have taken money out of the country and this Bill tries to get that money back. There is no point suggesting that a 15 per cent rate is not a penalty. Non-productive money comes back into the country and immediately becomes useful to the economy and to everybody within that economy. It is similar to money coming into the system when somebody wins the lottery or wins money by backing horses, dogs, etc. The money which they get is free to a degree but once it is used, every taxpayer benefits.

Up to ten or 20 years ago there was a reluctance among all elderly people, in rural or urban areas, to pay tax. They would have suggested that because income tax was originally brought in by British legislation, there was no moral obligation on them to pay it.

There is an amnesty for companies that are in arrears. We got notice from the Department of Social Welfare about an amnesty for arrears and now there is an amnesty on PAYE. It is suggested in the memorandum Members got from the Department that time would be given to pay the PRSI arrears. The regulations may not be out yet but there was no mention of a date being fixed or a minimum or a maximum amount of time being given. I think the Bill states that the returns would have to be in by 30 November 1993 and that all tax would have to be paid by 30 January 1994. If that is the case, companies will not be able to avail of the amnesty. If a company has reasonably substantial arrears there is no way it will be able to get the money between now and January 1994. It is suggested in the Minister's statement that this date is to allow companies to sell assets. There is no way an asset sale can be used by 90 per cent of the companies which are in arrears because their assets will already be tied up in financial institutions. I would ask the Minister to clarify whether 30 January 1994 is the cut off date. I would suggest that 30 January is too early because during the last amnesty the banks gave large amounts of money to people who were in arrears and they advertised loans to enable them to pay their taxes. That worked in the sense that the Revenue Commissioners got their money but it meant that a large number of companies were borrowing to avail of the amnesty. The banks are not advertising this time and they will not give money to pay arrears because many of the people who borrowed during the last amnesty cannot keep up their repayments. If 30 January 1994 is the date by which the company arrears have to be paid, this amnesty will not be productive. The amnesty I hope will be productive is the one which will bring back the hot money which went out of the country.

Some Senators said opinion polls, say no to this amnesty. If we ask a question in an opinion poll, people will give the answer for which they feel the pollster is looking. It would not take a genius to know that an opinion poll which asks about taxation would come up with the results it did.

Anybody who had taxation troubles in the past found that individual tax inspectors and senior tax officials have been exceptionally good in dealing with clients and understanding the problems companies can get into. I hope this Bill does not take from these Revenue staff the right to look at individual cases and to say that this person wants to keep their tax up to date but has a problem, they will be given time to pay. If the Bill specifically states that they cannot do that, the collection of taxes will not be made any easier.

If Revenue officials collected taxes monthly more tax would be collected, but it would come only from those in the tax net. No one in this House can tell me that the black economy is not flourishing. However, there are high ranking tax officials who would say that any country that does not have a flourishing black economy is in trouble because money circulates more freely in this economy than in a normal one. I agree that those who fall behind in their tax payments should suffer some form of a penalty but penal penalties never got anyone to pay their debt. If the Revenue Commissioners collected what was due monthly, people would not have these problems. No tax inspector or tax office collects money in the same manner as any ordinary business. As a businessman, I phone my customers at the end of the month and this often poses a problem because the boss may not be there or they may have no cheque book, but if one walks into the office and the the boss is there, there is a good chance of getting paid. More people should be employed to confront those who owe taxes rather than leaving it, as happens in certain places, to sheriff's who have no connection with the tax regime, but are paid a percentage on the amount they collect. If one amalgamates all the moneys and the interest collected by the sheriffs, they are probably getting a lot more than the combined salaries of the special collectors or the higher tax officers. I am sure there is no tax officer or Minister for Finance who would earn anywhere near the amount they collect each year.

To clarify the point further, the Bill states that a confidential office will be set up to collect moneys coming in from the amnesty and it will go into a general taxation account to ensure that local tax inspectors will not know it came this route. How can that work? If moneys come in from a special account, surely the local inspector will know it was not collected in the normal way. "Special collection functions may only be discharged by special collectors"; does that apply only to this amnesty or will it also apply in the future?

I welcome the Bill, although there may be problems with the dates of 30 November and 30 January because it may not be possible for companies who are in arrears to bring their tax up to date because they will not be able borrow or sell assets. If a company is behind in PAYE/PRSI payments, do they send the PAYE element to the special tax collector and the PRSI to the Department of Social Welfare? I sincerely hope that this amnesty works.

Mr. Norris

I only have a few remarks to make and they are principally of a general nature. As the Minister and his long suffering advisers are only too aware, I am not particularly skilled in the areas of mathematics, accountancy or finance but there are issues of principle involved in this Bill. In adding my voice of welcome to the Minister, I would like to add a note of sympathy to him because I do not honestly believe his heart is in this Bill; this is clear to those who can read the political signals. There was no real enthusiasm for it and although I know he cannot disclose this directly to the House, he probably urged and advised against it because I know him to be a man of principle.

What we have here is a balance between the pragmatic approach to our finances on the one hand and a principled approach on the other. The balance is wrong in this Bill because it is far too pragmatic; it acts as an incentive to those who have dodged paying taxes in the past and will do so in the future. It is a classic case of a disincentive to the ordinary decent people who regularly pay their taxes and are consistently — I suppose appropriately — hounded for comparatively tiny sums of money. The prospect of people with vast sums at their disposal, which they can shift around Europe in an almost abstract game-plan and then repatriate them, avoiding considerable liabilities — this Bill is most generous to those people — can only be a disincentive and a discouragement to people living on small margins. As the Minister is aware, one starts to pay income tax at a very low level of income. How can we explain this to those living on tight margins when they see what is referred to as the golden circle once more — apparently — getting away with this kind of tactic?

I do not intend to name names — it would be inappropriate and unfair — but I am sure the Minister is aware that there is a suspicion that this Bill was urged and promoted in the interests of certain large financial interests, individuals and businessmen who have been stung by recent changes in the world economic complexion and have sought to restore their financial balance by repatriating considerable sums held externally. It is worrying that these groups and individuals can apparently apply this sort of pressure to a Government — it may not be true but this is what is thought — so that they can obtain favourable treatment.

One cannot expect the Revenue Commissioners to make any kind of political statement on these issues, but I doubt if they are happy with this. It would be interesting to know what their professional attitude is to this matter because it seems to undermine their professional behaviour. They have done a good job but one must wonder how so much money apparently escaped; again we are dealing in hypotheses. The Minister, whom I heard on the radio some time ago, appeared to suggest that there could be a large benefit to the State from this measure. He was reasonable and stated that he could not put a figure on it, but he instanced a kind of historical precedent that during a previous amnesty they anticipated approximately £35 million and instead they got £530 million. That was the level of disparity. Presumably, having bitten the bullet and accepted this Bill, against, I am sure his better instincts, he must be hoping for a bonanza. That in itself will convey a message to the Irish public. It may be good in one sense for the Government to get this income but it will again illustrate to the people that there are people with substantial financial assets at their disposal who are able to get away with it.

This issue of confidentiality has been raised; it is a curious one, almost like the Roman Catholic seal of the confessional. The Revenue Commissioners can hear the financial confessions of businessmen but must not disclose it to any other authority. How successful will this be? To what extent will this undermine the morale of those in the Revenue Commissioners who must listen to this information and deal with people who may almost gloat about the fact that they have evaded the tax net?

I regard this kind of evasion or avoidance as a deeply unpatriotic act. I speak with some feeling because I am on PAYE. For many years I ran the Hirschfeld Centre — the gay community centre. We established it as a limited company and paid all our taxes, totalling approximately £150,000. Nobody made a profit, we did not even have a director's dinner. We were investigated by the Revenue Commissioners and this was proper. They spent ten days at the centre counting every safety pin——

Mr. Magner

The Senator must have done something.

Mr. Norris

We did. We realised that we could come under scrutiny so we decided to be whiter than white and kept receipts for every drawing pin and piece of paper. At the end of the investigation, we were surcharged 20 per cent for nondistribution of profits. In other words, because we had worked on a voluntary basis and did work which the Minister for Health and other Cabinet Ministers praised, we were surcharged 20 per cent. I thought that was a low dig. I asked the accountant why this happened. He said that in family controlled companies, if a substantial profit is made and reinvested in the company, the value of the asset increases without a tax yield to the State. I could understand that. I still smarted under the tax lash but I recognised there was a certain degree of logic. If we had been able to apply for charitable status we could have avoided paying this tax. I pay my tax willy-nilly — there is nothing I can do about it because I am on PAYE but because I have the commercial experience of paying all the tax due through a company I controlled, and because we did not profiteer we were surcharged. It is galling that some people may manipulate finances and avoid their responsibilities. This gives people the wrong impression.

Today I listened to a report on the radio about the Johnston, Mooney and O'Brien site in Ballsbridge. Suggestions were made that large sums of money were transferred to various places and there may or may not have been tax manipulation, evasion or avoidance, I do not understand the subtleties of such matters — but colossal profits were made by individuals in circumstances which would make me deeply suspicious. I wonder if all the capital gains tax, etc. has been paid? I, and I am sure the employees of Telecom Éireann, would like to know the answer to this question. Will the provisions of this Bill operate in these circumstances? If some of the principals involved in this murky transaction are discovered to have manipulated the tax code in order to evade tax, in a way that is not strictly legal, can they avail of this amnesty? I believe that would be a public scandal and there would be an outcry if that were to happen. Furthermore, it would consolidate the view that there is a golden circle.

I do not believe any party in this House is directly privy to it. Although, it has been traditional to smear Fianna Fáil with involvement in this golden circle, Labour are now riding shotgun and one must be careful about throwing mud of that kind. I never found this to be substantiated given the way Fianna Fáil has operated, particularly in recent times. There will be a scandal, there will be the appearance of wrong doing if the people in this particular situation are allowed to benefit from the provisions of this Bill.

With regard to health contributions, PRSI, etc., I would be a little worried about that. As managing director of Hirschfeld Enterprises Limited, we always paid PRSI and social welfare contributions because we regarded it as our moral duty and responsibility to have a pension fund, to pay social welfare and health contributions for our two salaried employees. What would have happened if one of our employees had an accident on the premises or became ill? A strong line must be taken with employers who fail to pay the required employers contribution and who then repatriate funds. What are the rights of worker in such circumstances? Are they retrospectively covered? Are their pensions made up? This is worrying because it is an immoral practice on the part of employers.

Let us assume that this amnesty works and produces enormous sums of money. The Minister has perfected a wonderfully copy prose style in his speech. I regret I was not able to be here to hear him deliver it, but I am sure he delivered it with his usual panache. Unfortunately, and this may account for my slightly slurred speech, I was having my teeth examined. I have almost read the entire speech and I do not believe the Minister mentioned what would be the possible application of these funds.

Mr. Farrelly

They will be running to the hangars at Aer Lingus with the funds.

Mr. Norris

If the Revenue Commissioners were unable to get their hands on this money because of a lack of staff, resources or facilities, would it not be an appropriate application of this money to make certain funds available to them so that they may have a more efficient operation in the future? I am merely attempting, in my amateurish way, to be helpful to the Minister with my naive suggestions.

I would like to make another suggestion which is a hobby-horse of mine and I may have mentioned it to the Minister before. It is not an entirely naive suggestion because recently in Luxembourg I mentioned it to people involved in the Commission in a financial capacity and they thought it was a good idea, although it did have flaws. The best possible application of any windfall in terms of Structural Funds or tax bonanzas would be to use it immediately reduce our external debt. I cannot think of anything which would increase employment opportunities and reduce taxation. Rather than building interpretative centres all over the country — with the single exception of the James Joyce Cultural Centre — I would spend all this money reducing our external debt. I wonder if the Minister would consider this because I believe we should be consistently trying to reduce our capital external debt.

I wish to ask the Minister — I realise he may have some difficulty in answering this honestly and in my experience, he has always tried to be as honest as political life will allow — whether this will be the last amnesty? We have had previous amnesties, each of which was to be the last. It is rather like Dame Nellie Melba who used to make positively final concert appearances. I wonder whether the Minister will be placed by his colleagues in the position of being the Nellie Melba of the financial world, continually producing positively final tax amnesties. I hope not because, although I am not expert in financial matters, I share the concern of the general public which is reflected in opinion polls, on radio programmes and so on, that there is something fraudulent, immoral, and unbalanced between the rights of poorly paid people and the rights of the very wealthy.

Having said that, I agree with Senator Lanigan that political life cannot be run entirely on the basis of the results of the last opinion poll, this would not be appropriate. However, there is widespread concern and I hope this will be the last tax amnesty — I regard it as inevitable that this Bill will be passed.

I heard some discussion as to the possibility of putting down an amendment indicating that this would be the last tax amnesty or putting in a clause which would prohibit any further tax amnesties before a certain date, but the Minister gave an explanation why this was futile. The Government could whenever it chose, as long as it had a majority, introduce new legislation repealing that clause and introducing another amnesty. The Minister was clear on this. It would be useful to have another statement from the Minister that future tax amnesties will not be considered because they are not moral, they are not an encouragement to the good citizens of the country and they clearly represent a pragmatic rather than a principled view.

Mr. Burke

I welcome the Minister to the House. To answer Senator Norris's comments about Senator Lanigan's opening remarks, we will have another amnesty not too far in the future. In relation to opinion polls, I am delighted he spelt out how opinion polls work because it was always our party's view that opinion polls worked in that way. I take issue with Senator Fahey. I have no doubt that this amnesty will not be the great success he outlined. The Government should first get its house in order with regard to the people who are properly paying taxes before giving an amnesty to anybody.

I spoke yesterday about commercial interest rates. It is important at this stage that the Minister ask the banks and the lending institutions why the commercial rate has not decreased in line with household mortgage interest rates, because business people, and in particular small businesses, are going through a lean period and they should get all the help they can by way of lower interest rates. I ask the Minister to call on the lending institutions to reduce their commercial lending rates forthwith.

I also wish to draw attention to two issues I raised previously in the Seanad. One deals with bus operators who are registered for VAT. I have called for bus operators to be allowed to reclaim their VAT on their bus equipment, their buses and their diesel. It is too bad if, on one hand, we can give an amnesty to people who evade taxes while, on the other penalising an industry which is providing a service. These businesses are providing transport while trying to compete with our public transport system, and now they have to compete with carriers from Northern Ireland, England and the Continent. It is time our bus operators were allowed to reclaim VAT on their buses and their diesel.

The second issues relates to commercial electrical retailers. These people are competing with the ESB. The ESB provides a service and is allowed to sell goods to the public interest free. The Government have no commitment to levelling the playing pitch for those people. I recently received a letter from the Minister for Transport, Energy and Communications, Deputy Cowen, and in it he clearly sets out that he has no intention of amending legislation to level the playing pitch. These people have to compete with a semi-State body and I call on the Minister for Finance to rectify that in the near future or, at the very latest, in the next budget.

In 1988 the Government cleared the decks with an amnesty, the purpose of which was to allow for the introduction of the self-assessment system of taxation. This is a frustrating reminder to the PAYE taxpayers that they will not be allowed to evade tax while others can continually evade it with official protection. The Government is telling us that it is forced to resort to this amnesty to find money to cover extended State services despite the fact that under the Revenue audit programme, 28,703 audits were completed in 1991, yielding just over £90 million. In 1992 they yielded £105 million and 600 staff transferred to the audit division to continue this excellent work. The plan of increasing the audit yield has now been destroyed.

Does the Government honestly think it will get new tax evaders, first time offenders, to disclose their accounts to the Government? I doubt that even 1,000 people in this country will pay up as new tax offenders. Those who evaded in 1988 are given a second opportunity in this tax amnesty to declare tax evasion, with no interest payments and no comeback.

If this amnesty is a success, does that mean our tax officials, who in my view, have been doing excellent work, were not carrying out their duties? I have a high regard for the work they do. They should be given the resources to communicate on a personal basis with taxpayers; the public at large would appreciate being able to deal on a more personal basis with Revenue.

Further moneys will be taken to places as far away as the Cayman Islands to escape the Revenue Commissioners once this tax amnesty is over. Can the Government not recall the 1977 double taxation agreement with the UK which provided for the non-disclosure of details of bona fide non-resident accounts to the other state's authorities? The Government also has a short memory when it comes to wealthy taxpayers who have been forced to leave this country and live abroad because of the deplorable taxes they have had to pay. This is an irony when you consider that we have been designing measures to entice capital back into this country.

The gravest aspect of this Bill is section 2 which provides for the 15 per cent amnesty. This is fraught with unprecedented dangers for taxation policy and administration. It seems that the method of obtaining a certificate under the amnesty is by way of self-declaration, and if a taxpayer declares that the amount is a full settlement of earnings and was not obtained from an illegal source then the Revenue Commissioners cannot refuse to issue a certificate. What will most likely happen is that the taxpayer, fearful of a future audit, will pay a nominal sum simply to purchase a certificate as an insurance policy against further audits. Does the Minister think subversive groups who have procured their ill-gotten gains in appalling ways would be troubled with making a false declaration about the nature of their gains?

I am opposed to this Bill because it is badly thought out, unworkable and unfair to the honest, hardworking people of this country who have paid taxes to this Government in order to compensate people who have refused to pay, and who will continually be aided by this Government not to pay tax as it falls due. We should have lower taxes and the playing pitch for smaller business people should be levelled. As other Senators have mentioned, many people could not pay their taxes and keep their businesses going. If taxes were lower they would not be in that position. I call on the Minister to lower taxes on business people and workers.

What are the other criminal law implications of this Bill? For instance, amnesty claimants may have defrauded and defaulted on their obligations to creditors, and this is especially so prior to companies going into receivership or liquidation because breaches of company law may have occurred and the proceeds of crime, such as drug trafficking or subversive activities, may be part of the amnesty revenue yield. Is the Government offering an amnesty for any of these crimes? Surely the Minister for Finance cannot be justified in introducing this amnesty for tax evaders.

The long term implications of this Bill have not been thought out. It is simply a crude, desperate and panic-stricken measure to get the Government through the 1994 budget. It is unfair to the taxpayers, it is unfair to the wealthy people who have paid their taxes and now watch while their neighbour, who may have earned a lot more, gets away without paying any taxes, with no come back and no interest payments due. Surely that is an injustice that cannot be tolerated. I call on the Government to withdraw the measure even at this late stage.

Mr. Farrelly

I do not intend to delay the House because a great deal of what I wanted to say has already been said. I have a number of questions as to why we are discussing such legislation at all. Many people who started small businesses and were providing employment felt that, because of penal taxes that were the order of the day for the last 20 years, there was no other way they could save money other than to put some by. This led to many articles by journalists on the black economy and what it was worth to the State. The Minister is now proposing to introduce an amnesty at the rate of 15 per cent to bring this money back in, hoping that the two partners in Government will, by the end of the year or early next year, have sufficient funds to pay for promises made in the Programme for a Partnership Government and many other things. All this is happening without taking into consideration what should be done in the long term if there were sufficient funds out there.

If these funds arrive on the doorstep of the Department of Finance they should be used not for today's or yesterday's lunch but either to reduce the national debt or to invest in job creation areas. Over the past 12 months I listened with interest to the debate on the seriousness of our financial problems and how severe penalties have been imposed on people who wish to start their own businesses. The 1992 Finance Bill was the most draconian ever introduced by any Government in the history of the State so far as business development was concerned. Listening and talking to people, I have no doubt that the measures introduced in that Bill to which, in many cases, the Labour Party objected, have had a detrimental effect on the position of people who have good ideas and would be prepared to borrow to start their own businesses. However because of those stringent penalties and costs many of the people involved in small businesses want to lay off employees. That is my experience and I am sure it is the experience of every other Member.

I am not saying the revenue should not do their job, but a situation has developed where a substantial number of civil servants who were working on Border duties before the introduction of the free market at the beginning of this year, have been transferred to Revenue. Now it is like a police state, for small business people; at any particular time you can have individuals sitting in unmarked cars watching others carrying out their daily duties. This is a new phenomenon in Irish life and it is a retrograde step. People with small businesses are subjected to this type of behaviour by members of a secret service watching what they do.

On the other hand, today we have the revelation about millions of pounds being made in one deal. This information came to our notice because a State company was involved. These are the ups and downs of society. It is the small business people who have ideas and want to create a few jobs in local parishes and communities and they are the people who are subjected to this. I believe we are going down the wrong road.

New stringent powers have been given to certain people in Revenue. This situation has developed over the last number of years. Many people would like to start their own businesses with interest rates at their present level but, as my colleague Senator Burke said, those rates only apply to the mortgage payer. If one is running a business or acquiring money for a business, rates of between 11.5 per cent and 14 per cent are quoted. In real terms one is paying double the rate and small business is being asked to pay for the loss incurred by companies that offer lower rates than the finance costs them. That is the practice that has developed.

There is another aspect to tax evasion or tax collection. In a number of cases which were brought to my notice over the last six to 12 months the Revenue Commissioners have called on taxpayers in their homes to collect unpaid tax only to find that the taxes were paid to the Revenue sheriff three or six months previously but that money had not been passed over to the State.

Let us call a spade a spade and put our house in order. Tax amnesties are not the answer to the Government's serious problems. The methods of tax collection and the delay in paying it over is not fair to the person who may have had to borrow to make those payments. There was nothing in this year's Finance Bill or in any other legislation brought before this House to change that situation. I object to that and I will do all in my capacity as a Member of the Oireachtas to change it.

Will this proposed amnesty work? It will not, for the reasons I have already outlined. What guarantee have the taxpayers who return and pay their 15 per cent that they will not be hounded for the rest of their lives? Will the attitude be that as this person has brought back money he must have been creaming a little off the top — between 5 per cent and 20 per cent — over a period of years and now that person must be watched? We will end up with more Revenue personnel watching these people from unmarked cars. We will have more people working for the Revenue than in other employment sectors. That is one reason I do not believe the tax amnesty will be successful. This State has developed a tax system that is anti-business and anti-success. As a result fewer people are willing to create employment. Because of the current interest rates we have no real growth in the economy.

The way we handled the financial crisis at the end of last year is another reason for our lack of development. The Government claimed that if the punt was not defended the country would collapse. We defended the currency. Did anyone lose their job as a result of their bad advice to the Minister? The Minister was lucky enough not to lose his. As soon as we devalued and the Germans reduced their interest rates, interest rates came tumbling down although we were told we would never reduce interest rates if, after the excellent work in the previous three years, we did not defend the punt.

What has happened? Interest rates are falling every day. The question of whether anyone lost their job after giving that advice to the Minister and the Government was never answered. That bad advice cost this State about £500 million. What did it cost individuals and mortgage holders? Then we ask why there is no growth in the economy. We ask why people are not rushing to borrow funds from the banks, banks that are now willing to lend such funds. Nobody is doing that because of the uncertainty created by our handling of the currency crisis and what has happened in the economy since then. Small entrepreneurs have no confidence in the economy and, apart from the few multinationals we may be lucky enough to convince to locate in Ireland they are the people who will create the jobs.

Will the Minister's guarantee be enough to convince people to declare and repatriate funds under this amnesty and that if they do they can sleep easy without continuous investigations and audits of their affairs? As I mentioned when debating the Finance Bill we now have a situation that when one group of auditors from the Revenue Commissioners finish inspecting the books, another group may arrive four or five or six days later. At that time the Minister said that did not happen. It does happen: it has happened to my relations, neighbours and to a number of people across the country.

This legislation is hastily conceived. It is interesting to note that no figure is being put on the projected revenue from it, probably because the Taoiseach was caught out recently after quoting figures which now have the other European nations up in arms. We will see if the Taoiseach's figures were accurate. It is probably right not to put a figure on this for that reason, although that promise was made before the two parties went into Coalition. I suppose the influence of the bright sparks on the Left ensures that no figures will be mentioned because we need £130 million to abolish the 1 per cent levy next year. If that figure is not achieved, who will pay? What will be taken out of the bag to produce the funds required to make up the loss and to provide for the different payments that have been postponed until 1994? That is why I asked the question and gave the answer, as I see it, that this proposed amnesty will not work as everybody on the Government benches would like to think it would.

Mr. Magner

Seemingly nothing works.

Mr. Farrelly

It is not so long since nothing worked in the Senator's view. It was amazing when a car or two was offered that many more people decided everything will work.

Mr. Magner

I drive my own car.

Mr. Farrelly

They can even go to the hangar and make any type of promises. Will this amnesty be the saviour of the Labour Party so that they can go back to the hangar and say we said there would be no redundancies but we are getting £250 million from the tax amnesty and hope that it will save them——

Mr. Magner

The Senator has not given one single constructive idea in an hour.

Mr. Farrelly

——in Dublin and in Meath and in all other places. What is the position?

Mr. Dardis

Senator Magner is heading for a crash landing.

Mr. Farrelly

In that case I hope that the doors of the hangar are open and perhaps it will not crash.

Mr. Magner

We still have the planes.

Mr. Farrelly

The hangar is where this proposed legislation started. I am not surprised the Acting Chairman is smiling. Many promises were made in different places but the hangar was a strange place to make promises. It will be interesting to see that ultimately so little was achieved by this legislation.

Mr. Dardis

I welcome the Minister to the House. As always, he extends us the courtesy of remaining for the debates on financial matters which are conducted here. The Progressive Democrats oppose this legislation fundamentally and from the point of view of principle. Occasionally in these Houses legislation is put through which we might consider to be bad legislation. It is opposed and resisted but it still goes through and in the course of time other Administrations come to office and repeal it.

This is not just bad legislation. This is wrong legislation and there will not even be an opportunity to repeal it because, as the Minister said, it is one last chance. It is getting to the stage where it is almost like well known artistes in the music business coming out of retirement and giving one last concert and then one more last concert and another. The Acting Chairman can identify quite readily with that type of situation given his background in media and entertainment.

Mr. Farrelly

It is coming out of the OK Corral with all guns blazing.

Mr. Dardis

Absolutely. We will get to firearms——

Acting Chairman (Mr. Mooney)

Do not bring me into this discussion, Senator.

Mr. Dardis

We would not wish to do that, Acting Chairman, other than if you were sitting across the floor from us. I intend to get to firearms in due course.

We cannot repeal this legislation because it is a one-off. It will go through and a possible commitment to reverse it does not arise. On occasions in this House we have rightly condemned the excesses of Administration in other countries such as the Latin American banana republics and some of the countries in the Middle East. I submit that in this legislation we are doing some of the things we would rightly condemn in other Administrations.

In this legislation we are holding up a mirror to ourselves as a society and anybody who looks into that mirror could not be pleased with what they see. Perhaps when the Taoiseach gets up in the morning he looks into the mirror and says "mirror, mirror on the wall, who is the fairest of us all?". By fair I do not mean in complexion but in justice. I wonder what the mirror says to the Taoiseach in the morning as he shaves?

This is the Government which has given us the 1 per cent levy on incomes and a probate tax on people with assets of £10,000 or more. People like public servants who have saved during the course of their lifetime, who have abided by the laws of the country, remitted their taxes and who have been encouraged to invest their money wisely, are being subjected to a probate tax. Now we say we are going to give amnesties to people who are very far removed from that situation. This is the Government which decided that elderly people living alone should pay extra charges on their telephone. This is the Government which is to give us an ethics in Government Bill.

The Acting Chairman will be aware that in the last Seanad when he and I were sitting on that side of the House and these benches were occupied by Labour Party Senators we listened often as they outlined to us what they thought of a society that gave us scandals such as Greencore, the state of the beef industry and Telecom Éireann. What they said at the time was nearly always correct and could be respected. I wonder how people from that party can now sit in silence and let legislation of this nature pass through this House and the other House? I know what they would say if they were not in Government. I find it very difficult to understand why the valid reservations that were expressed about the business ethics of this country by Labour Party Senators in the previous Seanad can now be cast aside and they can remain silent.

We discussed the Animal Remedies Bill, 1993 in the House yesterday. The Minister's colleague, Deputy Hyland, the Minister of State in the Department of Agriculture, rightly railed at what was being done in the livestock industry. He rightly condemned the use of illegal growth substances by people in that industry. We put through legislation which imposed very severe penalties on those people to ensure that that business would be operated efficiently and ethically and that the food exported from this country could be stood over as food of quality. That was good legislation but on the very next day we are presented with something that is not just bad legislation but is wrong.

On several occasions the Minister has referred to the matter of 15 million bank accounts. It was quoted once again in the papers the other day as if to suggest that there all these people operating bank accounts for some nefarious purposes. The point is that it does not come at all as a surprise that there are 15 million bank accounts in this country. If one thinks of one's own local village with its GAA club, its voluntary organisations and even its political parties, they all have bank accounts. All the businesses in the country have bank accounts and it is not a matter of surprise to me that there are 15 million accounts. They are not all operated by private individuals.

There are aspects of the legislation which go beyond the amnesty. We could argue about them and seek to amend them but I do not see the purpose of putting forward amendments to this legislation; what is required is not amendment but withdrawal of the measure. In particular, sections 2 and 3 of the Bill need to be withdrawn. Why should we bother going through the charade of putting forward amendments and debating them for several hours in the certain knowledge that they will not be accepted in this House because it would be presented to us that it would have to go back to the Dáil, as if that were some legitimate defence for not accepting amendments? In any event, apart from that aspect, what is the point of putting amendments to law which should not be there at all?

I wonder how much of this legislation may have been prompted by the way in which the Revenue Commissioners are coming to grips with non-compliance and the way they are getting closer and closer to the people who are not complying with the law and are not making proper tax returns? What is being said to the people in the Revenue Commissioners who are attempting to do their job professionally and well and are attempting to accrue to the State the moneys owned to it? Are we now saying to them they should not bother because if they put strong pressure on such people we will come to their defence and make sure the Revenue Commissioners cannot pursue them?

Regarding special collection officers, I am sure historians in a hundred years time will try to grapple with the weird provisions which have been included to support the general thrust of the Bill about bringing money home from abroad. The qualities of the confessional have been conferred on the special collection officers. My colleague, Deputy Cox, described this as the "trappist monk" aspect of the legislation. We may tell them our most inner secrets and for an 85 per cent discount we will be absolved but how dare the confessor go to the regulatory authority and inform them. That would be very bad given our culture and history; we must never inform on anybody. Our special collectors are, therefore, muzzled for all time.

Several references have been made to the amount of money the State may get from the amnesty. Senators on the other side have suggested it will get a large amount and Senators on this side have suggested it will not get very much. I do not know what the amount will be but I wonder why it was necessary to include capital acquisitions tax, property tax, the employment levies and so on if there was such confidence about how much we will get from this amnesty.

With regard to capital acquisitions tax, there are people who have been faced with significant financial pressures over the past ten years, who have been forced to liquidate assets, who year in, year out, availed of the opportunity, as it was previously, to take a £4,000 allowance for a married couple and a £2,000 allowance for a single person and, as it is now, £2,000 for a married couple and £1,000 for a single person. By doing this they possibly just managed to survive. However, in this Bill we are saying that somebody who liquidated all their investment assets at a much greater real value then those assets would now be worth and did not inform the Revenue Commissioners will not be penalised but the people who tried to regulate their affairs within the law to solve their financial problems are to be penalised in some way. I do not think this is acceptable and many Members of the House would agree with me. One could make the same argument about residential property tax and other taxes.

When we discuss issues such as Greencore and the beef industry, there is a presumption that conspicuous wealth is in some way undesirable. I do not regard such wealth as undesirable; it is how a person acquired that wealth that is at issue. It is quite legitimate for somebody to aspire to live in the most magnificent house in the most expensive part of Dublin city, to drive a 500 SCL Mercedes, to go on several continental holidays and to have a villa in Benidorm which the Minister described when he was talking about the Finance Bill. That is quite legitimate, there is no difficulty about it.

Mr. Magner

It is upsetting.

Mr. Dardis

It may upset many people. It would certainly upset me and I would share the Senator's envy about the matter but that is not the issue.

Mr. Magner

Frankly, it drives me mad.

Mr. Dardis

The issue is how they acquired the money to do it and whether it is allowable that they should acquire money that is properly the State's to fund their lifestyles.

In his speech on Second Stage the Minister said that funds raised by avoidance arrangements are not in the category of the amnesty. Of course they are not in this category. How could avoidance be in this category? If we enact a law in which some bright spark in Dawson Street, sitting in an accountant's or a stockbroker's office, can find a loophole, that is our fault and not his but if we make law which allows people to evade, that is our fault and their fault as well to avail of this activity.

References have been made to the 1988 amnesty. That amnesty was different in every way from this one. In the 1988 case the tax due had to be paid although the interest was waived. This amnesty is giving an 85 per cent discount of the amount due. The argument will be made that the State needs the money. I need money, we all need money, but we do not go into our local bank and rob it. The State always needs money. The more money it has the better but it should obtain its money through orthodox taxation, not through allowing people to conduct themselves in this way.

The principle of the rule of law arises. Is there equality before the law or is there not? From a constitutional point of view, is this legislation valid? My colleague, Deputy McDowell, has suggested that if this legislation were referred to the courts it would be cast aside. That may well be the case and we will leave it to the courts to adjudicate on this but it seems to fly in the face of everything we believe in about the rule of law and equality before the law. I do not think we can cite any precedent since the foundation of the State which flies in the face of that precept in the way this legislation does.

Senator Fahey made several references to members of the Progressive Democrats and misrepresented what they said in the Dáil. He said we have to face up to reality. There are realities in this country; there is the reality of child abuse, of illegal organisations and of murder. There are many realities in our society which we will never condone and never should condone; just because something is a reality does not mean it should be more readily condoned. The Senator also said people will only pay what they must pay. Of course they will only pay what they have to, nobody will pay any extra, but this legislation is about not paying what one must, it is about paying what one likes. That is the difference and that is why I believe what the Senator said was wrong.

Senator Fahey said that if it were not for the black economy the economy generally would not operate. What message does this give to somebody who starts in a back street of his local town mending cars and winds up with a garage, employing 30 or 40 people and submits his PAYE and VAT and everything else for which he is liable? We are then going to adopt a nod and wink attitude to the person who continues to operate in the back street in the black economy and bury the person who creates jobs? The people who create jobs and do it legitimately are those we should support. Morally, legally and socially, this legislation is indefensible. A Government should not act as a money laundering agency for people who do not act legally. What signal does it give to those who are compliant, to public servants, to the PAYE workers, to the people operating small businesses in country towns, who fulfil their obligations to the State and who, as Senator Norris said, are patriots? There are people in our society who believe it is their responsibility to pay their taxes, to fulfil their obligations to the State. They do not like doing it but they do it because they know it is right. We are saying to those who do otherwise that they can have their way and this is their one last chance. How many times have we heard that? It is like the refrain of the retired singer who comes out of retirement. To use the analogy of those carrying arms, we are telling them to dump their pistols but that they can keep their automatic weapons. Effectively that is what we are saying in financial terms. We are saying that crime pays. I say this legislation is not just bad, it is wrong; it should not be amended, it should be scrapped.

Dr. Henry

I will cheer the Minister by being brief. Senator Dardis spoke at the beginning of his contribution about the Taoiseach looking in the mirror and asking who is the finest of us all. It is perfectly obvious that this is not fair but then whoever said life is fair? I will begin on that gloomy note.

I feel sorry for the Revenue Commissioners who must look on this as a most deplorable operation. They have made genuine efforts, certainly as far as I am concerned and probably many Members here, to deal with people's tax returns as quickly as possible and I think this measure is a slap in the face for them. I also feel sorry for taxpayers, including myself, who having been paying tax year after year. I pay 52 per cent tax and the three women I employ who are also married all pay 52 per cent. If I had acted in a less legitimate manner with them over the years they could be paying only 15 per cent now.

I am a new Member of the House but this is one of the most confusing pieces of legislation I have ever seen. I would like to concentrate briefly on section 7 which deals with lack of disclosure and confidentiality. I object to permanently binding understandings of confidentiality. What if the Revenue Commissioners discovered that the proceeds they are being asked to launder came from the most gross criminal activity — arms running, drugs running, running of brothels and so on? I am glad the £500 fine has been removed because that would have been terrible but this is greater confidentiality than one could expect in respect of medical matters. If doctors find that something is against the common good and is really serious they are supposed to disclose it to someone.

It is most regrettable that the most sweeping generalisation has been made in this area of confidentiality. The Minister may have said elsewhere that there will be some restrictions but I cannot find them in the Bill. I think the house in Benidorm would be a minor matter compared to what might turn up. I hope there will be a pot of gold at the end of this rainbow but I think we have come along a muddy track to get to that pot of gold.

Mr. Cotter

I want to concentrate in my contribution on section 2 and perhaps make a few constructive suggestions with regard to what the Minister might do for other categories. It is clear, even though the Government parties are fighting a rearguard action to make it less obvious, that the vast majority of people reject section 2 of this Bill. They see it as repugnant, unfair and against the basic principle of social justice.

Listening to people here who are trying hard to justify it I know, as do most people, that the Minister did not favour section 2 of this Bill at the outset. He is now in the unhappy position of having to defend it and propose it to this and the other House even though his heart was never in it. He is in touch with the common people who have rejected the provisions of section 2 outright and do not want the Members of this House to have anything to do with it. The vast majority of people who are not covered by what is proposed in the section believe it is rewarding wrongdoing.

Who are the people with huge sums of money stashed away abroad? There is only a relatively small number of people in that category. Rich people are a strong lobby because of the power they wield and their influence allows them to get away with this. There is a great dilemma here in that ordinary people — who comprise 98 per cent of the population — who pay their taxes and are subject every day to the Garda are up in arms about this. It drives a wedge between people and confirms what they always thought, namely, the super rich are an untouchable category whereas the other 98 per cent of the nation must obey the law. Our courts are full of these people every week where they must face the consequences of carrying out some minor offences.

International law also favours the super rich. Police forces worldwide co-operate in hunting down certain classes of criminals. In this Bill we are defining someone who refuses to pay his taxes and stashes money away abroad as a criminal. However, international law does not deal with that and governments are not willing to co-operate to track down such people. Why do governments not co-operate to track down these criminals? Obviously, it is because the super rich have super power. Some will say we are practical people and there is money out there that we need. That kind of practicality is not acceptable to the self-employed who believe they are being exploited by the Revenue Commissioners. The super rich should be subject to the law as are the rest of us. Clearly, they are not and they are wielding the kind of power which protects them.

Deputy Davern said that people have billions of pounds abroad. He must know a lot about them, I do not have many friends in such circles but he obviously does. I think he said that there is about £2 billion in banks abroad. These people have no intention of bringing that money back because they have no fear. They have plenty of money here and abroad. They are not concerned about the Minister for Finance and the rest of us who need money to run the country. They have no intention of bringing that money back.

Section 2 is an absolute farce. It will make no contribution to social justice. It will confirm people in their view that there are two laws, one for them and another for the people who have the power to evade the law with impunity. That is the sad aspect of section 2. It will create a spirit of anarchy in 98 per cent of the population, the people who could not pay their mortgages last autumn. The PAYE workers seldom look at their weekly wage packets, they just spend the money to keep their families going on a tight budget. However, they are beginning to ask themselves how some people have huge sums of money stashed away when their pay cheques have been subjected to a 1 per cent levy. PAYE workers are well aware they are the people who keep this country going. They are also aware now that we have super rich people with bank accounts all over the world — undeclared money — and that the Government proposes that they bring this money back in return for a few pounds and a pat on the head, and invest their money legally from now on. That is anarchic and it drives people crazy.

The people who are in difficulty with the tax man are not the super rich, but the self-employed — the PAYE taxpayers always have a clean sheet. Small self-employed people are in trouble with the tax office because of the way they run their businesses. They work hard for themselves and their families and their affairs often run into disarray because they do not have the time for office work. They cannot afford to employ somebody to keep their accounts for the Revenue and they occasionally get into difficulties where they have to borrow from a bank and have to register the deeds of their properties and put all their family possessions in hock to pay the tax man.

I accept that everybody must pay their taxes. However, when people read section 2 of this Bill and listen to Deputy Davern and others who know the people who have huge amounts of money abroad illegally — and here — how do they feel? Most people are striving hard to eke out an existence and they are certainly not happy with section 2.

I have a proposal for the Minister. He is willing to appoint a special collection officer to deal with these shadowy people full-time in the confessional, listening to them, ensuring they tell their sins, giving them absolution etc., as Senator Dardis said. Why does he not introduce a scheme to make it easy for the ordinary slogger who runs into trouble because he cannot afford to pay his taxes? The Minister could introduce a fair monthly payments system for self-employed people.

The Revenue Commissioners could appoint an officer to run a special account to hold money until it determined what tax was due and return the individual who has made the monthly payments the interest that is due, less administration costs. Why can we not construct a system to look after the 98 per cent of people who wish to work for themselves and their families and stay on the right side of the law, instead of spending time looking after the super rich and driving the rest of the nation mad? I suggest that the Minister come up with a scheme where people can make monthly payments of an amount they decide themselves, so that when the time comes to pay their taxes they will have some money to draw on. They could not do this on their own because they cannot employ staff to carry out these functions.

It would be a great day's work if the Minister scrapped sections 2, apologised to the nation for having even considered it and looked after the 98 per cent of taxpayers. I am certain the self-employed would be very happy to know they could make payments to the Revenue Commissioners which would be placed in an interest earning bank account until the end of the year when their tax liability became known. There would then be a small sum of money plus the interest on it available to pay off that tax. I await the Minister's response to my suggestion.

I want to make a final plea to the Minister to listen to the voices of John and Mary citizen — the 98 per cent of people who are not super rich. They are now aware after various investigations that there are golden circles. On Saturday nights in various places around this city rich men sit down over a glass of port after a heavy dinner and they decide how to make a few million pounds the next week for petty cash. They are the vultures in our society and we know of their activities. It has been proved that the golden circles exist and are the major part of the black economy, not poor Jack working in his back yard, and not paying taxes. Let this House and our legislation recognise that golden circles exist.

The last election proves how volatile the electorate are and that volatility has been created because the people are disturbed at what they are learning. Some of us, who are in this House when we did not expect to be, can testify that before the general election the Labour Party was seen as driving a carriage with eight white horses in front.

Mr. Magner

I knew the Senator could not resist it.

Mr. Cotter

I am speaking about reality.

Mr. Belton

They are piebald now.

Mr. Cotter

Yes, the white horses have turned out to be piebald.

Mr. Magner

It shows we are not racist.

Mr. Cotter

The Labour Party has tarnished its image and it must now live with it — that is the bottom line. Those of us who oppose section 2 of this Bill speak for the majority of people. The Labour Party used to do that, but they have decided to put on a suit of armour and go out and savage all around them.

Mr. Magner

The polls still say we do.

Mr. Cotter

Now the Labour Party is in power it will take it out on people. It is willing to crucify anybody who gets in its way in the interests of holding on to power. However, the people will respond in their own way when the time comes.

The Minister should listen to the vast majority of the people and scrap section 2 and replace it with realistic help for those who are forever falling into difficulties with the Revenue. It is not their fault that in running their businesses cost effectively they cannot afford to employ staff to keep books for the Revenue. If the Minister looks after these people he will be looking after most of the people of Ireland. To hell with the super rich who can afford to have international bank accounts. The Minister should try to get the governments of the world to agree that these people are as much criminals as those who run drugs and try to get international agreements to hunt them down. I hope the Minister will respond favourably to what I have said.

Mr. Belton

I welcome the Minister for the House. As we speak publicans are being approached by gardaí and asked for licences. Many of these people have been in that business for a number of years as were their parents before them. They may owe money and, therefore, be refused a licence. However, if the Minister decided all publicans who did not have their tax affairs in order would benefit from an amnesty and pay 15 per cent tax, other publicans who had paid would be in uproar.

That is a simple common-sense comparison but the Minister has not used common sense here. His advisers could have told him the idea I mentioned was good. Some publicans might have to go out of business and it would be better to get some money from them and let them remain in business. It would be sensible in the way this Government has sense but the Minister would not accept it. How could he? It would be unfair to those who have paid tax. This Bill commits the same unfairness on a broader scale.

I hope the Minister explains to the House who wanted this Bill. The Labour Party did not want it. One member said it was "hard to live with it" another said he "found it difficult". It is certainly against everything the Labour Party ever represented. In the other House the Tánaiste used to stand up day after day against the dragons of Fianna Fáil. My colleague here called him the man in shining armour. Everything corrupt in this State would be rooted out by the Labour Party. That party described many dealings as wrong which were not. However, it was good copy and gave the party a good image.

Labour has good image-makers who put their message across to the people. They were persuaded Labour would provide the change they wanted and in the election the Labour Party had their day. They are now part of a partnership and the legislation before us is one result of that deal. These honourable, upright harbingers of truth, justice and open government say they are not for this Bill, are not happy with it and "find it difficult to live with it". Nonetheless it is going through the Oireachtas.

The most extraordinary fact is the chairman of the Labour Party, Deputy Kemmy, is the first to be interviewed by RTE and the newspapers. He has almost become the Leader of the Opposition. Have people lost all sense of direction or is everything being manipulated in a public relations exercise? We must ask ourselves is this real or for show? The Minister would see reality if he spoke to publicans and their families trying to make ends meet. Honest, just government is about addressing such realities.

We are led to believe through another propaganda exercise that Labour is not in favour of this legislation. That may not have been said but we are led to believe it. In this country we are "led to believe" almost everything. This is done carefully. Someone whispers to a political correspondent that a person is not in favour of a move. Then it is in print and we are "led to believe" it. I do not think the Minister has ever said he is against this legislation but he has not said he is for it either. It will be interesting to see if the Minister will state his position on it. That would be a start.

Mr. Magner

It is highly unlikely, to say the least.

Mr. Belton

Are we not entitled to know that?

Mr. Cotter

We have to read between the lines.

Mr. Belton

If he is for it at least we know one person is in favour of this legislation. The public do not support it, the Revenue Commissioners did not want it, so perhaps the Minister is the only person in the State in favour of it. That would make him unique.

Another figure is being mentioned by newspapers and politicians. A sum of £500 million is supposed to have been raised by the last amnesty. A line was cast and £500 million was at the end of the line. I believe much of that money was already in the tax system and would have come into it in any case.

Mr. Magner

Senator Belton has not mentioned the Labour Party for one minute.

Mr. Cotter

It is almost unmentionable now.

Mr. Belton

If one is in the system, making an effort to pay taxes, and is in arrears for over £10,000, that person's name can be and is published. That was one of the threats used to make people pay tax. The Minister should explain why under the new legislation no names will be published. Not only that, some officials in the Revenue Commissioners will not know what others know. I want to know who is being protected. Who thought of this idea first? It could be the same person or group of people who wanted and proposed the legislation. No one seems to know who that may be. I hope the Minister will be able to explain these issues. If Senator Magner wishes to contribute I am sure he will be able to explain them also.

Mr. Quinn

I have a story about a visit I made to the United States on a tight time schedule. As we taxied along the runway I looked at my watch. The pilot revved the engine three times and returned to the terminal. I asked the hostess if we would be able to keep the schedule. She said: "The pilot heard a strange sound in the engine. He was unhappy." I realised we would be unlikely to be on time. Within five minutes the plane turned and took off. I was delighted we were going to be on time. I remarked to the hostess that the engine's problem had been solved very quickly and I asked her what had been changed. She said they changed the pilot.

As the Minister for Finance will realise, the story is not quite true. However, the moral is that we, as a nation must take risks. We must be entrepreneurial and we must strive to be successful, while acknowledging the risks involved. Punctuality is important in an airline and it is also important to keep a clean record.

I consider this tax amnesty as an entre-preneural way for the State to earn £300 million. It is hard to reject the possibility of £300 million coming into the State, and, perhaps, £2 billion coming in for the benefit of Irish industry. However, the risks are high. Those who have no choice with regard to the tax they pay will be shaken by the thought that certain people have moved this money elsewhere and people who have done this in the past may be tempted to do so again. We run a risk similar to the one that airline took but the Minister has decided it is worth while to take this risk.

I hope the Minister has taken into account the long term implications which may develop as a result of the difficulties that may be created by a lack of respect for the taxation system. I am sure he has balanced that against the benefits the State may obtain from the £2 billion and £300 million.

Having listened to the debate in this House and in the other House and having read about it in the newspapers, I know all the arguments have been made. I have heard nothing new. I hope the Minister and the Government have struck the right balance. In trying to estimate the benefits that will accrue from this amnesty, I hope the Minister has taken into account the risks and the damage that may be caused by lack of respect for the taxation system. I hope the correct balance has been struck because we need to have respect for the taxation system if it is to succeed.

Minister for Finance (Mr. B. Ahern)

I thank all the Senators who have contributed to this excellent debate for the past five hours. We have heard some stimulating contributions. I am the only person who has had the benefit of listening to all the speeches. It is interesting to note that there are divergent views within parties. No one party has the same view on this issue, including my own party.

In the past hour we heard Senator Farrelly's rather interesting speech which is the second one he has made against the Revenue Commissioners in the past month. A few weeks ago he spoke on the Finance Bill. He is concerned about the unmarked cars watching business people. I do not know if the Revenue Commissioners have unmarked cars. I will check this out after the debate. I accept the Senator has a bee in his bonnet about the Revenue Commissioners. However, I do not want to know the reason for this because the Revenue Commissioners would not give me the details. His analysis of how the Revenue Commissioners operate is incorrect.

Mr. Cotter

Senator Farrelly is paying too much tax.

Mr. B. Ahern

This makes him the same as everyone else. He was making the case for all those individuals who might be helped by this Bill.

Like Senator Belton, I do not know many of these people. The best of luck to the individuals who are described as having a house worth £0.5 million, a Mercedes 500 and a holiday home. I do not mind if they have two Mercedes as long as they pay their taxes.

Mr. Magner

What does a Revenue Commissioners marked car look like? Is there a harp on it?

Mr. B. Ahern

I am not concerned about these people if they pay their taxes.

Mr. Belton

They might become party supporters.

Mr. B. Ahern

I would be concerned about them if they did not pay their taxes.

The Bill is an important one because it represents a pragmatic attempt to clear outstanding pre-April 1991 tax liabilities and to bring people into the tax net who were not previously included. It does this by means of carrot and stick. As I have said before, and hopefully this is the last time I will say it in this debate, I cannot make a judgment on the amount of money this amnesty will yield.

I know more about this issue now than I did when it started. There is a considerable amount of undeclared money in one form or another. Some 170,000 case were brought to the attention of the Revenue Commissioners under the 1988 tax amnesty; under 400 of these were unknown to the Revenue Commissioners. Therefore, I do not believe there are many outside the net five years later who are unknown to the Revenue Commissioners.

Unfortunately, many people are concealing their income in one way or another. If one looks at the MRBI opinion poll this morning there are many people in this category. I listened to and was part of the debate in the other House, on Committee Stage last week and this week and here today, and one would imagine that the poll should be 95 per cent to 5 per cent. It is interesting to see that it is 50 per cent to 43 per cent which is extremely close.

Mr. Cotter

It only polled 1,000 people.

Mr. B. Ahern

If the 50 per cent could be easily won over on the basis of the carrot that was offered, then the result would be 50 per cent to 43 per cent the other way. Some of these people are publicans. Senator Belton has confessed to being among the 43 per cent. When he carefully studies the sections of the Bill he will see that some of the people he is making a plea for, and not unjustly so, can either get benefits from the 15 per cent amnesty if they are sole traders, or get benefits on interest and penalties. It might be in their interest to avail of the amnesty.

The carrot is the availability, subject to certain conditions, of a 15 per cent tax rate for individuals with undeclared or underdeclared income on capital gains and a waiver of interest and penalties for other pre-April 1991 tax liabilities at present undischarged. The stick is the serious consequences for ignoring or abusing the amnesty. Unless they now regularise their tax affairs, those who have acted irresponsibly will stand exposed to new and severe penalties. With the ongoing stregthening of Revenue's compliance programme, these people cannot have the same confidence as they might have had in the pre-self-assessment era. Their evasion cannot be successfully concealed in the future. Moreover, the Bill provides for equally severe penalties in relation to future tax offences. By legislating for these penalties, taken with the considerable enhancement of Revenue's capability and the combat evasion process brought about by the recent Finance Acts, the Oireachtas will be giving a clear signal that it will not tolerate future tax fraud.

I do not want to single out my good colleague, Senator Farrelly, who was in the other House for a long time and is now in this House. However, his speech highlighted the double-think attitude from which we suffer. He complained about the Bill, about closing the loopholes, about tax avoidance and about the Revenue Commissioners. It is the old story that one cannot have it both ways. We must close the loopholes to stop people putting money outside the system and give powers to the Revenue Commissioners. As Senator Cotter said rather well when he put forward a case for which I have a lot of sympathy and one that was put forward earlier this morning by Senator O'Kennedy, we want a society where all individuals will pay their fair share of taxes. Then, by the law of averages, we will all pay less tax and we will not have as much inequality in the system.

In my many deliberations and considerations on this Bill, I went through the arguments. One has to agree there is inequity in the system in so far as some people are going to get away with paying a lower rate of tax. That might seem unfair but one has to look at the other side of the argument. Will we ever tax them otherwise? The reason only 400 people took up the 1988 amnesty out of all the hundreds of thousands of cases was that the 1988 amnesty was attractive to those in the system but unattractive to those outside the system. For people who had money outside the system paying interest and penalties was something they were never charged with so what good was interest or penalties to them? They had made their millions.

A person whom I do not know called my office rather late the other evening and a girl in the office put him through to me, asking if I would answer a couple of questions for him, the same kind of questions I have been asked here today. I answered the questions for him. I did not ask him his name although he gave me enough hints that I would know where he was living and what he was at but I was not pursuing that. This man is entitled to the amnesty. He is living in the State in a rural area that I would not consider affluent. At the end of the call he was almost ready to send me his accounts. I tried to advise him to see a local accountant which he did not want to do because he did not want them to know how much he had, which is one of the difficulties. When I had things fairly clear I asked him how much he had outside the system. He told me that he has been outside the system for about 12 to 13 years and that he had £1.6 million and he proceeded to tell me precisely where it was; it was all in one account. He is entitled to avail of the amnesty and although he is not an old man he was concerned to regulate his affairs. I think the only reason he was doing it was so that he would sleep better.

Mr. Belton

Did he win the lottery?

Mr. B. Ahern

No, he did not win the Lotto. I will not outline how he got the money.

Mr. Belton

That is the point.

Mr. O'Kennedy

It is a question of confidentiality.

Mr. B. Ahern

He told me.

Mr. Belton

The Minister cannot reveal that.

Mr. Magner

It would be a terrible shock for Fine Gael.

Mr. Cotter

He was a decent man in all other respects.

Mr. B. Ahern

He was, other than that he got into a situation where he started dodging the system and then it became easier to dodge it than be in it. He is also aware, like many others, that the person from the Revenue Commissioners is getting close. The officials from the Revenue Commissioners are calling into the smaller shops and into places where, on the face to it, there does not seem to be any business or any money being made. However, we should never judge the book by the cover and the same applies when talking about non-compliant taxpayers.

This Bill offers one last chance for tax evaders to voluntarily become compliant. If they take this opportunity, if they regularise their tax affairs from the pre-1991 period and come inside the system for the future they will be afforded certain assurances and protections. However, if they refuse to take this chance then they must be clear that they are much more likely to be detected and will have to face serious consequences. Senator Calnan supported me strongly on that point earlier in that confidentiality is essential; otherwise we are fooling ourselves and there is no point in bringing in an amnesty.

The amnesty is not being introduced because of sympathy for tax evaders, far from it. It is being introduced because the practical reality is that tax evasion in respect of pre-April 1991 liabilities, especially from the pre-self-assessment era is difficult to detect at this remove, whereas the normal penalties constitute a considerable deterrent to those with undischarged liabilities of long standing. In these circumstances, as matters stand these liabilities would remain totally undischarged. Moreover, the people concerned would inevitably be disposed, for fear of the repercussions of becoming more compliant, to remain outside the system to a greater or lesser extent.

The amnesty is being introduced because there seems a good prospect of inducing these hitherto non-compliant taxpayers to come clean — time will tell whether they do but that is what we are attempting to do — and to make a payment and become compliant from 1992-93 onwards by means of a careful combination of attractive options for doing so and potential punishment for not doing so.

There are assurances I can give the non-compliant taxpayers and this House. However, I cannot assure them that if they come into the system and tell partial lies the cover of the 1992-93 certificate will get them clear. It is a chance they take. We can, however, assure the non-compliant taxpayers that if they come to the special collector and give an honest declaration that is subsequently followed through and can be examined under the 1992-93 tax form and that the two equal each other, they get away with a particularly good bargain. However, there must be consistency and the figures must be straight on both sides of the equation.

I do not want to mislead this House. Some Senators have been picking on a few aspects of this Bill and saying that if people come to the special collector there is no link with the other sections of the Revenue Commissioners. There is no link from the special collector for other sections of the Revenue Commissioners. However, one cannot get the benefit of the amnesty unless the 1992-93 tax form is in by the end of next January. If the inspector sees that someone has £50,000 more than any previously known income and asks if there was a certificate in he will be told there was and will not be given any extra information. However, if that certificate matched £10,000 going back a number of years, the individual who tries that will not get the benefit of the amnesty. I can say with certainty that person will be paying far more.

Whatever about those ifs, buts and maybes, we can guarantee beyond a shadow of doubt that people who do not take advantage of this amnesty will have to put up with many sleepless nights in future. They will have far more difficulty and will not get away with it in the future. The full rigours of the system will home in on the non-compliant taxpayers from 15 January next — supported by the two parties in Government — with a vigour not seen in this country in recent decades. If they come clean now they will get the benefit or will face the consequences later.

I am sure there are those who will not listen but the penalties are severe and the Revenue Commissioners are closing in. Compliant taxpayers have nothing to fear whatsoever. People who will benefit from this amnesty and tell the truth will have nothing to fear. However, people who ignore it will do so at their peril. The House will not hear me give any more chances. Frankly I am tired of giving some of these people a last chance——

Mr. Belton

The Minister will be known as "last chance Bertie".

Mr. B. Ahern

I do not accept that. These people will argue, and with some justification, that they never had the benefit of an amnesty. These non-complaint people outside the tax net did not get an amnesty in the sense that the 1988 amnesty held no attraction for them.

Mr. Belton

The PAYE workers never got an amnesty. The 1 per cent income levy is all they received.

An Leas-Chathaoirleach

The Minister, without interruption.

Mr. B. Ahern

The PAYE workers received an average 6 per cent pay increase with 1 per cent inflation. This represents a real increase of 5 per cent for the first half of this year under this excellent Government. It is one of the best returns the PAYE workers have received over the years, even allowing for the 1 per cent income levy. On the latest figures over the weekend these workers have fared better than those in other OECD countries. It is not bad.

The people concerned inevitably are disposed to fear the repercussions of becoming compliant and, therefore, they endeavour to remain outside the system to a greater or lesser extent. The amnesty has been introduced because there appears to be a good prospect of getting them into the tax net. This, I hope, will bring valuable revenue into the Exchequer and widen the tax base for the future. It will also help to release funds that have been dormant in the economy and are of no productive use to the country.

Senator Cregan raised the issue of jail sentencing and questioned if tax evaders would be jailed for tax evasion. I consider the penalty provisions which we introduced on Report Stage in the Dáil, which received the agreement of all the parties, strike a fair balance in this area. On the one hand concern was expressed in the earlier Stages of the debate in the Dáil that mandatory jail sentences were being provided for minor offences. However, the Oireachtas must send a clear signal to the courts that large-scale tax evasion is a very serious matter and should be treated accordingly when sentences are being imposed. Therefore, I believe the amendment to section 9 and 11 which I introduced on Report Stage in the Dáil and which were incorporated in the Bill before the Seanad today send the correct signal in this area. This was agreed by the Finance spokesmen of all parties.

Regarding offences in respect of amounts of tax up to £100,000, there is a system of maximum financial penalties graduated by reference to the amount of tax unpaid. There is also provision for associated maximum prison sentences, again graduated by reference to the amount of tax unpaid. The imposition of a prison sentence in all cases will be at the discretion of the courts. Where the amount of unpaid tax is £100,000 or more, a prison sentence is mandatory, with a maximum of eight years in such cases. There is also a maximum financial penalty reflecting the seriousness of the offence.

At the other end of the spectrum, I pay particular heed to the view expressed that those whose offences are relatively minor should not be liable to a large financial penalty. Where the amount of tax evaded is less than £1,200, the monetary penalty in the case of summary conviction is limited to a quarter of the amount of the tax involved.

Overall, I believe the provisions now contained in sections 9 and 11 of the Bill takes a reasonable approach to the difficult question of penalties. They send the appropriate signals to the courts and they fulfil the time-honoured aim of making the punishment fit the crime. I believe a good compromise has been agreed. With regard to minor offences, it is at the court's discretion to impose a jail sentence but such a course of action is highly unlikely given the practice established under section 19 of the Finance Act, 1983. The courts will generally take the view that in such cases the individual should be fined. The fines are relatively small at the lower end; however, as the degree of the offence increases to the point that the evasion exceeds £100,000, the clear signal of the Oireachtas as to the action to be taken must be considered. I am pleased to have received the support of this House and of the Dáil on this issue.

Senator Cregan and Senator D'Arcy raised the question about those who made false returns for the 1991-92 tax year being able to claim the benefit of the amnesty. The amnesty applies only to liabilities up to 5 April 1991 and, accordingly, the obligations of the scheme do not extend to the 1991-92 tax affairs. At the same time, the normal obligations still exist for 1991-92 and persons in this position can send a revised return to the inspector of taxes. While they may be subject to some interest and penalties, the period in respect of which these might arise will be much shorter than for older liabilities. In addition, such persons can expect the more sympathetic approach the Revenue Commissioners would normally adopt in cases of voluntary disclosure.

Senator Howard, Senator O'Kennedy and Senator Cregan expressed concern at what they considered to be the impact of this Bill on the public morality underpinning the tax system. They are concerned about the provision of a 15 per cent tax rate for evaders, while compliant taxpayers are obliged to pay much higher rates. Senator Cotter expressed similar concerns.

These are not unreasonable concerns but the Government has to deal with realities. The reality is that tax evasion exists and despite the laws that have been passed over the decades and the best efforts of the Revenue Commissioners, it is difficult today to detect evasion that may have happened many years ago and it will become increasingly difficult to do so with the passage of time. The question is whether it is better to ignore this fact or to face it and endeavour to take some action. The Government has decided to take action because the rewards for a carefully framed amnesty, as this Bill provides could be substantial.

First, there is the clear prospect of obtaining some payment from tax evaders who have escaped notice for years and appear likely to continue to do so. Secondly, there is a clear gain from bringing these people into the tax net so that they become compliant from the 1992-93 tax year onwards. Thirdly, there is the prospect that funds currently lying dormant for fear of the Revenue Commissioners will be activated within the economy, making it more dynamic and creating a better climate for job creation which is the first priorty. These are the three prizes the Government seeks and it is the Government's opinion that they are worth achieving.

Senator D'Arcy suggested that the provisions in section 13 relating to access by the Revenue Commissioners to bank accounts might cause a flow of funds out of the country. First, there is no change in relation to the accounts held by nonresidents. Secondly, there is no evidence that section 13 is having the effect the Senator fears. In any event the tax evader has nothing to gain by moving funds now because the records of his accounts will still be available. Moreover, the Revenue Commissioners will still have to be able to show reasonable grounds for supposing that the taxpayer had concealed the existence of a bank account and must convince the appeal commissioners that a determination should be issued granting the Revenue Commissioners access to such accounts.

I want to kill the delusion apparently held by some Senators that following the passage of this Bill the Revenue Commissioners will be able to call to the local branch of a bank and start checking the accounts. While many Senators said that they would be quite happy with this, it raises major difficulties. Therefore, the Government is moving no more than 5 per cent towards such a system. In the UK where there is no self-assessment, however, there is access to bank accounts by special commissioners in a far more liberal way than under our system.

For the record I will outline the procedure applying in this country. An inspector must have material evidence and reasonable circumstances. With that the inspector presents whatever data has been compiled to his superiors. They must be satisfied that there is a reasonable case and they then put the case to the Revenue Board who submit it to their legal advisers. These legal advisers then present the case to the DPP. Following this the case is presented to the appeal commissioners and they must inform the relevant institution or individual that the bank account is required for inspection. The case is then heard at the office of the appeals commissioner. He considers the case of the Revenue Commissioners, and such a case must be put; the institution holding the account may put a case, as may the individual. It is only following this that the appeals commissioner if he sees fit, can allow access or grant a determination to seek the relevant account. This is not a loose system and unless the individual has hidden something of substance there is little to cause concern.

The Senator will be aware that in the other House I moved amendments to ensure that both the taxpayer and the financial institution are notified of any appeals commissioner hearing in cases like these. They can be present or represented at such a hearing. The introduction of the special savings account with a 10 per cent DIRT rate and no further liability to income tax on the interest income has greatly increased the attraction for residents to hold a legitimate account with a financial institution here. The introduction of such accounts has been very successful in preventing outflows of capital when exchange controls were abolished at the start of this year.

A number of Senators asked me to continue the battle to keep interest rates down and to keep the margin of interest rates within the matrix agreed with the Central Bank. I certainly will do that.

I want to answer another question which Senator Farrelly raised. I am not sure where he has been for the last six months but I want to remind him of what has happened. The reason the Government put up a battle for the Irish pound last year was to distinguish between what happened when sterling devalued by 19 per cent, when Italy fell out of the system and when Spain and Portugal devalued in September and November. The unanimous view in financial circles and in business was that we should not just follow what tends to be a weak currency over any extended period of time. It was thought that we should endeavour to stand on our own in spite of the fact that every country both inside and outside the European Community had the same difficulties. Sweden, Finland and Norway all had difficulties during the currency crisis, as did every country in the European system. It was an international currency crisis which, not surprisingly, created chaos because the financial gurus had US $1,000 million a day to move around the world, and that is what they did for that four or five months.

We had to stand over what we had achieved since 1989 and show that we believed in our currency, that we were not prepared to give in easily and that we wished to establish a strong position for our currency. With great difficulty, losing our reserves and certainly inflicting short term pain on citizens, we fought it out, by and large, with support from all sides until the end. Earlier this year, after a new Government was formed it was decided that it was not in the interests of exchange rate policy, monetary policy, fiscal policy or the Irish economy to go further. We had made our point and taken a stand and there was nothing else we could do.

However, we did not want to go down the road of a 19 per cent devaluation which is what would have happened and is what happened to Spain and Portugal who had to devalue in September, November and again in May more or less in an equal percentage to sterling. Italy was outside the system and France was able to survive only because of special arrangements. We decided to devalue by 10 per cent because, having been at the top of the band, that was effectively 7.5 per cent.

After we devalued, nothing came into the Irish reserves. We devalued in the last weekend in January and the markets sat back and waited to see the next move of the new Government. Day after day, with some concern I admit now, I watched the inputs. Senator O'Kennedy as a former Minister for Finance will recall the system in the Department of Finance where one checks the inflows and the outflows each morning. Money stopped going out, which would not have been difficult since there was none left, and we waited to see what would happen. The international community made no move until they saw a clear signal from the new Government which was formed on 12 January, which had made a decision on 30 January and brought in a budget on 25 February. Nothing happened for three weeks and they sat and withheld judgment to see what would develop. The international community saw we were adhering to the Maastricht guidelines, to tight monetary fiscal policies and that we were remaining within the narrow band of the ERM and continuing to take the necessary discipline with our own finances. The day after the budget over £450 million came in; this was the first money to come into the country since it started going out during the previous September and, thankfully, it has never stopped.

Interest rates for one month and three month money stay in this country at 6 per cent because of the decision and hard nosed attitude of a new Government who, in difficult circumstances, implemented the correct monetary and fiscal policies. I hope it will remain this way; I have no doubt that if the Government move away from it, there will be the opposite flow. Senator Farrelly's argument stems from a misunderstanding of how the system operates which I understand because it is complicated. However, if one were to follow his logic the currency would be bouncing up and down every day.

We should recall what happened because it is something of which everybody in this country can feel justifiably proud. We did not follow the 19 per cent devaluation of sterling. When we were finally forced reluctantly to devalue, when we had shown that we were prepared to fight for our currency, we devalued by 7 per cent which was 12 per cent less than our nearest trading partner. Since then we have been able to reduce interest rates. On budget day interest rates were just under 20 per cent, in sharp contrast to present interbank rates. Governments may not be able to solve everything but they can solve and deal with matters of economic policy based on strong exchange policy. This Government did that and let nobody claim it happened for any other reason.

We cannot be sure of the type of money which is outside the country but clearly it is there. We have devised as simple a system as possible. The special collector is not a Revenue Commissioner inspector or an investigator. The special collector is there to deal what they believe to be the truth from non-compliant taxpayers who have money outstanding from the pre-April 1991 era and who declare they are now becoming legitimate taxpayers. The payment of the money starts the process; some Senators were saying it ends the process but that is incorrect. When people declare they wish to be legitimate taxpayers, they are moving from non-compliance to compliance and the inspector will take without question what they have said.

As soon as people leave the office, which we will set up fairly soon, they must then act like a compliant taxpayer. They must fill in the 1992-93 form and make whatever adjustments and corrections are necessary to the 1991-92 form. If they decide to change the game as soon as they get outside the door and go back to their old ways, they will not only be caught but they will not get the benefits of the amnesty and they will have to pay the penalties.

For those who are examining and studying the record, we are not in any way frightening anyone away from this amnesty. We just want to give them a clear message that they must be consistent, they must do things knowingly and willingly and tell the truth when bringing their affairs up to date. If they do that they get the 15 per cent amnesty, fill up their form, remain a legitimate taxpayer thereafter and there is no difficulty. If they do otherwise, they are in trouble. I believe that people who come in will get it right but the test for the future lies with the other category.

It is my view that we will not see such a measure again in this country for a long time. For the record, I predict we will not see the word "amnesty" being referred to in the next 20 years; indeed, it would be wrong if it was mentioned in the next 20 years. I hope we have progressed from the position I was in last year when I closed 39 loopholes in one week under the Finance Bill. My own party and our coalition partners at the time kindly voted for the measure, although many of them did not believe in it. The Programme for a Partnership Government, which will be around for another four years, is committed to helping compliant taxpayers. There will be a change in emphasis.

Senators Calnan and O'Kennedy said this morning that all politicians, when talking about crime and related matters, must also consider the non-compliant taxpayers. This Bill clearly states that those who have got money from illegal means, such as drug trafficking and other crimes, are excluded from the amnesty. A Senator asked how will I know these individuals; I will not know, but if I discover them subsequently, the matter will be rectified. There is already a provision in our tax Acts prior to 1983 to deal with that matter. Money got as a result of criminal activity is part of the tax system and one has to pay tax on that money because the tax system is not a criminal system. If one has got money from criminal activity, that does not remove the obligation to pay tax on it. If a person benefits from this amnesty and is found by the Garda drug or fraud squads, the special task force or the courts to be involved in criminal activity and to have benefited from it, they will lose the benefit of the amnesty — that is how they will be caught. If we really want a compliant society in regard to taxation, we must get that message clearly across because there is a difficulty, Senator O'Kennedy clearly referred to it this morning, that people think there is nothing wrong with not paying tax, that it is a different kind of crime.

Every Monday morning, many of my constituents are brought to court and are given anything from a week to three months and more recently, for serious offences such as stealing a car and racing around parts of my constituency for half an hour and often causing damage, they are sentenced for several years. I take a hard line on crime. I was the one who probably took one of the toughest lines in regard to the Criminal Justice Bill in 1984 about wanting strong measures to deal with crime. Recently, I fought hard in Government to reintroduce the old Metropolitan Police Act, better known in the inner city as "Lugs Brannigan's Act". The Bill has not passed through the other House yet but it will soon be back. Those convicted of loitering, for example, will spend up to seven days in jail and I strongly support that. However it must also follow that if a person has defrauded the State of £100,000 or £1 million, they must also see the inside of Mountjoy or other prisons. That is how I see it.

I received some letters from businessmen over the past few days saying they agreed with this amnesty, that I was absolutely right — reducing the tax level to 15 per cent, thus bringing in additional taxes, making sure it is confidential etc., but they said I made one mistake, namely, the proposal to put people into jail for tax offences. The mother of a young woman, sentenced for 14 days for robbing a shop in Henry Street, came to me a few weeks ago asking for help to get her out of jail. I told her I would not because I have always held a strong view on crime but I have my defence in saying that the eyes of the law are fair in all respects. The way we have devised this Bill, with the help of the Oireachtas, will ensure there will be no jail sentences or major fines — although this will be at the discretion of the courts — for smaller evaders, but this will not be the case for the large scale evaders.

I hope this Bill will be a success in moving us towards a more compliant society; the question of money is another issue. If the Bill makes our society more compliant, it will have been worth it. If it does not, then we will have to consider tougher penalties. I hope this Bill, based and balanced on a carrot and stick basis, will correct what is a major difficulty in our taxation system.

Question put and agreed to.

An Leas-Chathaoirleach

When is it proposed to take Committee Stage?

Mr. Mullooly

It is proposed to take Committee Stage at 4.45 p.m.

Committee Stage ordered for 4.45 p.m. today.

Seanad Éireann díospóireacht - Thursday, 8 Jul 1993