Dermot Ahern was talking tough this week. The Minister for Social, Community and Family Affairs declared war on chancers, cheats and fraudsters.
"The people who abuse the system are in fact robbing the people who are genuinely dependent on welfare payments as well as the taxpayers. They do not have a place in society; they will be detected and they will pay the price."
The man who famously couldn't find payments to his former colleague Ray Burke even when he looked up every tree in north Dublin clearly has more success when it comes to finding those who are claiming dole payments or old-age pensions to which they are not entitled.
Social welfare fraud is a disgrace, and the figures released this week show that Dermot Ahern's Department has been diligent in rooting it out. More than 600 investigators from the Department of Social, Community and Family Affairs carried out an impressive 448,000 reviews of claims for benefit. Savings of £214 million were achieved for the Exchequer from a total social welfare bill of about £5.3 billion last year. Though the proportion suggests that the vast majority of welfare claims are legitimate, the amount of money saved is undeniably significant.
And the threat of jail for welfare cheats is real. Nine people were imprisoned for social welfare fraud or abuse last year, with sentences ranging from 14 days to five months. A further 23 received suspended sentences and 120 were fined between £10 and £2,000. Six others were ordered to do community service. Another 510 cases are before the courts and a further 269 cases are with the Chief State Solicitor. The Minister's claim that cheats will not go unpunished seems fully justified.
Provided, of course, the cheats are small-time, obscure little people, claiming the dole while doing nixers, or drawing one-parent family allowances while being supported by a live-in lover. The kind of people who cropped up in other arenas this week - Dermot Ahern's old friend Ray Burke with his offshore accounts, the farmer at the Beverley Cooper-Flynn libel trial with his bogus non-resident account - don't have quite the same certainty that "they will be detected and they will pay the price."
Tax evasion robs the Exchequer of a lot more money than social welfare fraud. As far back as 1988, when the Exchequer was on its knees, there was £3.5 billion in taxation outstanding. In 1999, while Dermot Ahern's crackdown was saving the Exchequer £192 million, the Comptroller and Auditor General's report revealed that £1.2 billion was outstanding in unpaid taxes, and that only half of it was likely to be collected. The £214 million Dermot Ahern claims to have saved by detecting the abuse of social welfare in 2000 compares with the C & AG's estimate of just over £1 billion in the amount of taxation revenue outstanding to the end of May 2000, with the Revenue Commissioners expecting to collect about £560 million of it.
YET the rigour that the State applies to policing the taxation and welfare systems is in inverse proportion to the amount of money it loses through the abuse of each of them. While social welfare inspectors reviewed nearly 450,000 claims last year, the Revenue carried out just 17,428 audits, down 767 on the year before. There are, in other words, well over 20 times more checks on social welfare claims than there are on tax returns.
While the 600 social welfare inspectors seem well-equipped to police their system, the system of tax inspection is still struggling to cope. The most recent C & AG report highlights the inability of the Revenue's crack investigation branch to keep up with the flow of information it receives. Information on people involved in unit trusts has not been captured on a database for several years. Not all data has been transferred from paper to computer files.
Even when tax fraud is uncovered, the chances of the fraudster ending up in court, never mind in prison, are far less than they are for those who diddle the welfare system. A total of 723 people were sent to court on charges of abusing or defrauding the social welfare system in 2000.
In the previous year (the latest for which figures are available), a grand total of three people faced charges for tax evasion in the courts. And while 32 people received prison sentences for social welfare abuses, and nine unfortunates actually went to jail, no one at all went to jail for tax fraud. One of the three was fined £15,000, another £1,000, and the third was acquitted. The sum total of the State's retribution against tax evaders who deprived the Exchequer of more than £1 billion was £16,000.
Nobody has yet been prosecuted for failing to avail of the tax amnesty of 1993, even though prison sentences for those who hid money from the Revenue at that time are supposed to be mandatory. Hundreds of thousands of people evaded DIRT with impunity. The banks that systematically colluded in this fraud merely had to cough up what they owed. The large section of the business community that participated in the Ansbacher scam is still intact. But at least these pillars of society can sleep soundly at night, knowing that the forces of justice are on the prowl and the grubby little dole cheats have no place to hide.
fotoole@irish-times.ie