John Perry
Ceist:9 Mr. Perry asked the Minister for Finance his views on the recommendations (details supplied) of the Revenue Powers Group. [8657/04]
Amharc ar fhreagraTuesday, 23 March 2004
Ceisteanna (10, 11)
Jan O'Sullivan
Ceist:63 Ms O’Sullivan asked the Minister for Finance the progress made by his Department and the Revenue Commissioners in their consideration of the recommendations of the Revenue Powers Group; when he expects a decision will be made on its recommendations; and if he will make a statement on the matter. [8939/04]
Amharc ar fhreagraFreagraí ó Béal (7 píosaí cainte)
I propose to take Questions Nos. 9 and 63 together.
I established the Revenue Powers Group, chaired by Mr. Justice Frank Murphy, to examine Revenue's main statutory powers and report to me on changes needed. As I pointed out to Deputies in my response to several parliamentary questions regarding the Revenue Powers Group last month, I am very grateful to the group for its considerable efforts in producing the report within a demanding timescale. I have decided to allow a period for debate and public reflection on the many and varied issues with which the report deals. Thus, with one important exception that would have arisen anyway — a power to allow Revenue access information held by a non-resident entity over which a domestic financial institution has control — I am not implementing any of its recommendations in this year's Finance Bill but will review all the group's recommendations for next year's Bill.
My Department and the Office of the Revenue Commissioners are examining the contents of the report. Given my view that it is appropriate to allow time for these issues to be considered, I do not consider it appropriate to comment at this time on individual recommendations.
Is it not very difficult to have a debate and reflection if the Minister sits on his hands and says nothing? Surely the essence of debate and reflection is that there is an exchange. The Revenue Powers Group proposed that there be access to telephone records, which is a reasonable provision if there is a clear protocol as to when it would happen. In other words, it should not be the first step in an investigation. The power suggested to question those detained by the Garda for revenue offences is also reasonable, provided it is set in a context outlining the circumstances in which these powers may be used. I have no problem either with the proposal that taxpayers need to satisfy the Revenue Commissioners that payments coming from "have" countries, that is those with which we do not have a double tax agreement, are bona fide commercial payments. I would like to hear the Minister's views on those proposals which suggest prudent tightening of the Revenue's powers. Will the Minister say whether concerns have been addressed to him or whether he has views on these matters from his experience?
It was my idea to set up a Revenue Powers Group. I promised it in the Finance Bill in 1998, perhaps on Report Stage, but did not get around to organising it until 2003. One of the terms of reference for the group was to advise me as to the appropriate balance between the need to secure the revenue of the State and the rights of the taxpayer. With regard to the three points raised by Deputy Bruton, it is important to get the appropriate balance between the powers of the Revenue Commissioners and the rights of individuals.
In my time as Minister for Finance I have given fairly draconian powers to the commissioners. The Finance Bill 1999 gave additional powers to those given in previous finance Bills and we now have a body of Revenue law which gives much of the balance to the Revenue Commissioners. Therefore, in setting up this Revenue Powers Group, I was anxious to bring back an appropriate balance between the various areas. Matters such as access to phone records and the right to question people in custody, matters to which Deputy Bruton referred, are at the kernel of the appropriate balances being struck.
The Revenue Powers Group fulfilled the recommendation as part of a package. I am not normally reluctant to give my opinion on various matters but on this matter I would like to hear the views of representative bodies, the various institutes involved in the area, the Joint Committee on Finance and the Public Service and the advice of the Deputy and other individuals before making my decision. It would not be appropriate that when the group reports, I would just set out what I personally think of what we have done in a number of areas. I decided to give this period of reflection before next year's Finance Bill. Then having considered all the issues, I will make a decision as to what should or should not be included in the Finance Bill 2005.
The Minister is correct in saying that the Revenue Powers Group must draw a distinction between the compliant taxpayer, who should not be excessively intruded upon, and a tax evader or tax fraudster. While I welcome the statement by the Revenue Powers Group regarding provisions for honest mistakes, partially reflected by the Minister in this year's Finance Act, I am concerned that some of the recommendations could constitute a significant softening of the line against tax evasion. Perhaps the Minister will have an opportunity to comment in detail on this. For instance, significant recommendations are made concerning mitigation of penalties and publication of the names of defaulters with regard to penalty levels.
I am particularly concerned that the group is entirely composed of eminent tax practitioners, presumably highly paid, or persons related to tax practice in terms of work. Does the Minister agree that these tax practitioners, given as they are to selling the practices of tax avoidance, are unlikely to feel the level of rage that ordinary compliant taxpayers feel about what has gone on with regard to tax evasion here over the past 20 years? Will the Minister reconsider the representativeness of this group so that compliant taxpayers — not tax practitioners making money out of tax avoidance — who have paid their whack for 20 years will have an input into the deliberations? Their input would result in something more active against tax fraud.
I remind the Deputy that this group has concluded its work and will not sit again. I am thankful to it for speedily reporting to me. The group was chaired by Mr. Justice Frank Murphy and its members were cross-representative. The group examined Revenue powers and assessed the main statutory powers available to the Revenue Commissioners. Naturally, the people I asked to sit on it were people with experience in the particular area. Mr. Justice Murphy, a retired justice of the Supreme Court, chaired the group and produced the report expeditiously.
Deputy Bruton referred to some of the additional recommendations. One of the additional recommendations to which he referred and the only one I took from the Revenue Powers Group was the matter to which the previous question referred. Most people would say that they want more powers given to the Revenue Commissioners. The group has recommended some changes in other areas.
I am trying to abide by my self-imposed silence with regard to my views on publication. The publication figure of £10,000 was introduced a long time ago. It has been suggested by many people — I have not changed it in my seven years as Minister for Finance — that we should have a different publication figure now because so many people are included in the list that if we set the figure at a higher level, greater odium would fall on those whose names were published. That is one view. I am willing to listen to views from all quarters on this matter before making a decision for next year's Finance Bill.
I do not wish to inhibit anyone regarding what they want to say. Deputy Burton has a particular way of looking at this area but other Deputies may look at it differently. When I have heard everybody, I will decide what to include in next year's Bill.
Does the Minister accept that part of the equation regarding the effectiveness of Revenue powers relates to the question of resources and that while the Revenue Commissioners have not asked for additional resources there are systemic problems within the commission. Some of these relate to the turnover of staff and specialisms which are not quickly enough addressed and which affect audits being done around the country. The matter has been partially addressed but there is constant referring of decisions upwards rather than the devolution of many of these decisions at local and regional level.
Massive changes have taken place in the operation of the Revenue Commission over the past 25 years, and all have been for the better. As someone who has spent over 30 years involved in accountancy and who has had many dealings with the commission in my working life, I am aware of the enormous changes that have taken place. I compliment the commission on how it has changed over this period.
The Revenue Commission is organised in a certain way. Its manual of instruction has changed over the years and it has changed the manner in which it makes decisions. It tries to get as much as possible done at the lower levels and to allow people make their own decisions. However, it is important that there are checks and balances within the organisational structure. The commission has made tremendously positive changes over the years — and I do not say this because I am Minister for Finance — to try to strike the right balance. I am sure it would accept that sometimes it has not got the balance right. It is important for everyone's satisfaction that there are various levels of reporting. It can happen that if a wrong decision is made at lower level, the top level gets much of the blame for it. The commission has tried to devise a system over the years to have the appropriate levels of responsibility. In my view it works exceptionally well.