The Finance Bill published yesterday has added to the already considerable armoury at the disposal of the Revenue Commissioners in their pursuit of tax evaders.
A new offence of facilitating tax evasion will allow the Revenue to seek, for the first time, the prosecution of individuals who aid and abet tax evasion. In addition, the directors and managers of organisations that commit this and other tax offences may be prosecuted for negligence, even if not directly involved. The Minister for Finance has also acceded to the Revenue Commissioners' request for additional powers to facilitate their investigation of the abuse of single premium insurance products.
The impetus - and justification - for granting these new powers lie in part with the public disquiet at the rash of scandals at Allied Irish Bank last year and the findings, published around the same time, of the High Court inspectors' inquiry into National Irish Bank. The investigation into single premium products follows on from the offshore assets investigation of last year, which had its genesis with the DIRT inquiry. In that respect the measures announced yesterday are part of a trend that has seen a significant expansion of the Revenue's powers since the emergence at the McCracken tribunal in 1997 of the existence of the Ansbacher account scheme.
Paradoxically, the measures announced yesterday will not have consequences for the directors and executives of financial institutions who have already been linked to tax evasions because, for constitutional reasons, they cannot apply retrospectively. But they should act as a deterrent to individuals in positions of authority in the future.
In granting the new powers, the Minister for Finance acknowledged the requirement to strike a balance between the need to combat tax evasion and the legitimate concerns of compliant taxpayers, who may feel that the tax system as it stands already places an onerous burden on them. Equally, those involved in serious, orchestrated tax evasion must be distinguished from individuals with relatively small tax issues that may arise due to what could be termed honest mistakes. In that context the Minister's decision to raise the threshold for naming and shaming tax evaders as well as reforming the interest and penalty regime are progressive steps.
Ultimately the most effective means of ensuring widespread tax compliance is a fair system administered in an even-handed and transparent fashion. Great strides in this direction have been made possible by the economic prosperity of recent years. Safeguarding these gains remains the priority.