The banks "got off lightly" in their DIRT tax settlements with the Revenue Commissioners and should now make a voluntary act of reparation to the State, the Dail Public Accounts Committee's outgoing chairman, Mr Jim Mitchell, said.
Presenting the PAC's third and final report on DIRT tax evasion in the 1980s and 1990s, Mr Mitchell also criticised the Revenue Commissioners, Department of Finance and Central Bank for their part in allowing wide-scale DIRT tax evasion to thrive.
The report recommends that the cost of any future inquiries be borne by the persons or companies being examined. Mr Mitchell made it clear he wanted the financial institutions to bear the £2 million cost of the DIRT inquiry.
The PAC is calling on the Minister for Finance, Mr McCreevy, to incorporate this recommendation in the next Finance Bill or sooner.
Another key recommendation seeks to remove the anomaly in the Taxes Consolidation Act that allowed the banks to incur relatively low penalties. The chairman of the Revenue Commissioners, Mr Dermot Quigley, told the PAC the banks would have had to pay a further £397 million on top of the £173 million DIRT tax settlement if the penalties that applied to individuals had been brought to bear on the banks.
The report is seeking the elimination of this distinction in the next Finance Bill. Its legal advice is that any such change could not be applied retrospectively, with Mr Mitchell calling for a voluntary payment from the banking sector to make up for the low level of penalties.
"If banks were being good citizens they would make an act of reparation." Mr Mitchell said. "The jury is still out" as to whether the banks were now the model citizens they claimed to be. "The banks acted disgracefully. Banks actively facilitated and encouraged the evasion of taxes at a time when acute public services were being closed down," he said.
An "excessive settlement culture" at the Revenue Commissioners was also to blame for what happened, according to the report, which calls for the posts of chairman and chief executive of the organisation to be separated, with a non-executive appointee to hold the position of chairman. The Department of Finance working group report to the DIRT inquiry went against the separation of the chief executive and chairman's role but accepts the need for non-executives on the board of the Revenue. The PAC report rejected this as "a fudge" and will be seeking to have its recommendation accepted by the Department of Finance.
The PAC set a deadline of January 2002 for the establishment of a board to oversee the regulation of the accountancy sector.
A summary of the main recommendations of the final report of the parliamentary inquiry into DIRT is available on the Irish Times website at: www.ireland.com