Revenue must show equality over politicians' tax affairs

The response from politicians and the Revenue Commissioners to the tax evasion uncovered in the Dunnes tribunal has taken a predictable course.

Politicians have expressed "outrage". The Revenue Commissioners have said they will ensure the tax code is fully implemented. And a Department of Finance spokeswoman said the need for new powers is being examined in the light of the tribunal findings.

The cycle is familiar. The Revenue's powers have increased in recent years. In 1992, in the wake of the Greencore and Telecom scandals, Bertie Ahern's Budget gave the Revenue a range of new powers. More were added as a quid pro quo for the 1993 tax amnesty.

The Beef tribunal report led to the infamous "Whistlebowers' Charter", obliging professionals to report suspected tax evasion, which was subsequently watered down substantially.

In part, the increase in Revenue powers has been a reaction to public outrage and concern. It has also been part of the move to a self-assessment tax system, where taxpayers calculate their own tax, with tough penalties for evaders.

This time the Revenue and the Department are set to look at whether the taxman should have greater access to bank deposits. Only the accounts of named individuals suspected of tax evasion can be examined at present. So they would have been unable to trawl through the banking system to uncover the Ansbacher deposits, for which some records survived in Ireland. Framing new Revenue powers in this area may be difficult.

However, some politicians have raised more fundamental questions. Labour leader Dick Spring has said the Revenue has questions to answer over the handling of Mr Michael Lowry and Mr Charles Haughey.

We do not know the details of their tax affairs. But we do know the tribunal report concluded that Mr Lowry's arrangements with Dunnes Stores - including building a very visible house extension - were designed to evade tax.

And Mr Justice McCracken also wrote that he believed Mr Haughey deliberately shrouded the gifts from Mr Dunne in secrecy and allowed the money to be kept offshore, to ensure that the Revenue would not discover it.

So the question is raised about the extent to which the Revenue monitored the tax affairs of Mr Lowry and his company, Streamline, and if the current controversy was the first whiff it got of the problem. And with Mr Haughey, it is unclear to what extent it investigated the sources of his income and wealth.

The Revenue, of course, operates independently. But the public will want to be reassured that it treats all taxpayers equally and that files of senior political figures are examined as rigorously as those of the average taxpayer. The evidence placed before the tribunal suggests there are legitimate questions to be asked in this area.

Senior figures in the Revenue Commissioners - and their direct political master, the Minister for Finance, Mr McCreevy - will know that the Revenue's response to the tribunal is important. In particular, Michael Lowry appears not to have provided full details of income when availing of the tax amnesty and could face criminal prosecution.

Much play has been made of the tough penalties now facing tax evaders. The Revenue has beefed up its routine audit activity with a tougher approach to investigating errant taxpayers. It has wide powers to audit an individual's assets and wealth and regularly seeks details of assets and income going back some years. It can also examine bank accounts and in certain circumstances can even enter a private home.

Tax experts say that while many of these powers are used sparingly, their very existence means that many of those who have not paid their tax own up and do a deal before they become subject to the full force of the Revenue's powers.

And the Revenue's annual report says a new, special prosecutions policy unit was set up last year "in keeping with our commitment to prosecute offenders in cases of serious tax evasion". Some cases have been referred to the Garda Fraud Squad and the Revenue is considering sending some cases directly to the DPP. A few summary convictions have been obtained, but no one in Ireland has ever been jailed for tax evasion. Ireland has yet to have its Lester Piggott - a high-profile evader sent to jail.

But the Revenue will be mindful of another high-profile case, that of Ken Dodd, where the prosecution collapsed. Revenue officials here have been trained to get the evidence needed for a full criminal prosecution, although legal sources say that proving a case may not be easy. Evidence uncovered in a tribunal, for example, cannot be used directly in evidence in such a case. All the powers are now with the Revenue and our senior politicians say major tax evaders should be jailed. The coming months will demonstrate whether this threat is a real one.