Credibility of Revenue at stake in bogus account saga

Empty threats from the Revenue Commissioners are not a new phenomenon but they have set many precedents that give succour to those deeply attached to tax evasion.

Monday's announcement by the Revenue that it collected a further £176 million (€223 million) from 3,500 holders of bogus non-resident accounts, in addition to the £173 million already collected from the financial institutions, is a further welcome step. But it is, I believe, only the tip of the iceberg.

The next phase is the prosecution phase, as an estimated 45,000 bogus non-resident accounts still remain unaccounted for. It is for that reason that the credibility of the Revenue is now at stake.

The Public Accounts Committee (PAC) has long held the view that exemplary action by the Revenue would have salutary and wide-ranging effects. Yet the number of prosecutions for tax evasion remains at an incredibly low figure even in the aftermath of the DIRT Inquiry. This is despite the fact that the Commissioners have had their powers extended repeatedly.

There are a few readily recognisable reasons why this should be so. First, there has existed in the Revenue for decades a settlement culture. Moreover, the Revenue would have seen a reluctance to prosecute white-collar criminals reflected in the courts in the past. Thus the prosecution route was seen too often to be a waste of time and resources.

While both the Revenue and the courts seem to have changed, or at least to be moving in the right direction, real problems remain.

The Revenue cannot credibly threaten prosecution because it is the Director of Public Prosecutions, not the Revenue, that decides whether or not to prosecute. Also, the court route can be tortuous and drawn-out and offers well-resourced tax suspects many opportunities to tie up Revenue staff for a long time in each case. If there are thousands of cases, as in the DIRT scandal, it has the potential to seriously divert the Revenue from current tax issues.

I believe we have reached the day when the Revenue organisation should be re-structured, and the entire tax appeal and prosecution system streamlined. In its DIRT Report, the PAC inter alia called for a new revenue act to provide for this. Among the reforms proposed to be included was the introduction of some non-executive commissioners, one of whom should be non-executive chairman. This is an attempt to dilute the inbred culture of the Revenue and to provide for internal accountability of the executive commissioners.

The proposed act would also include reform of the appeal commissioners.

I would also like to see a fiscal prosecutor and a revenue court included in the act.

The idea of a fiscal prosecutor is not a new one. Many countries have such an office and there is ample evidence that it works. The idea is that, because of the specialised nature of tax crime, a specialised prosecution apparatus is needed. It would lead to a great deal more efficiency and Revenue threats of prosecution would ring less hollow. Tax prosecutions would be delegated to the fiscal prosecutor, whose office would have the necessary expertise in both tax and legal processes, unless they were part of a wider crime investigation.

A revenue court would have assigned to it assessors with tax expertise and would provide a fast track for Revenue prosecutions to be heard without undue delay.

The experience of the DIRT Inquiry must open our eyes to the reality of the extent of tax evasion in the past. But do we know that it is any less now?

I have frequent indications that there is still a thriving "cash" culture in operation. This is a continuation of a situation where a minority plunder, on a daily basis, the majority of law-abiding taxpayers whose tax bills are, as a result, higher than they should be.

This brings me to the final point about the non-prosecution record of the Revenue. Does it not, in reality, reflect the absence of political will over the years? Can a Government led by Fianna Fβil, who presided over two tax amnesties, be depended upon to act in the interest of the majority? The cute hoors are still in town!

Mr Jim Mitchell T.D. is shadow minister for finance and deputy leader of Fine Gael