In 1983, asked what his society would do if the Government insisted on giving the Revenue Commissioners the power to examine its investors' accounts, the managing director of the Irish Permanent Building Society Edmund Farrell said: "We would take it to the Supreme Court and then appeal it ad infinitum."
In the same year, an ESRI economist Joe Durkan put the amount of "undisclosed income earned each year" in Ireland at about £1,500 million. G.E. Boyle of the National Planning Board put the figure at £1,563 million in the Irish Banking Review in March 1984. In 1985, the fifth report of the Commission on Taxation reckoned that income was under-declared in the previous year by about £1,200 million. It pointed out that the tax owed on that figure was "equivalent to 2 1/2 per cent of GNP and about one-third of the current budget deficit". In December 1986, a reply to a Dail question revealed that £1,578 million was owed in uncollected income tax (including DIRT payments) and that only £205 million of this was deemed "likely to be collected".
Yet, throughout the 1980s, the numbers of staff employed by the Revenue Commissioners was allowed to fall. In 1987, the Irish Tax Officials Union highlighted the results: "Time spent examining individual cases is dropping, the number of cases being examined is dropping, the tax system is moving towards a taxpayer response system only and not pursuing potential cases of abuse. In effect, wait until the problem knocks on the door, don't go looking for it . . . The deciding factor is what work must be done rather than what work should be done."
For anyone who was interested, in other words, the broad outlines of what is now being revealed about tax evasion was perfectly obvious even in the 1980s. It was known that there was a massive black economy and that huge amounts of taxes were not being collected. It was known that this failure was a very significant factor in the rise of the current budget deficit that would, in turn, be paid for by the weakest sections of society in the form of savage cutbacks in essential social services.
And it was public knowledge that the Revenue Commissioners were doing very little about any of this.
At the same time as all of this was going on, though, the State in general was taking a very hard line with a particular group of people - those who had failed, through ignorance, incapacity or misinformation, to claim pensions to which they were entitled. In December 1985, for example, a 70-year-old woman retired from her job and went looking for the State pension to which she had been entitled for the previous four years. The Department of Social Welfare refused to give her more than three months back money, depriving her of £6,435 to which she was entitled and for which she had paid weekly insurance contributions.
SOME of the examples of this practice cited by the Ombudsman in a report published last June are almost unbelievable. One woman, for example, was supposed to be receiving the contributory widow's pension from 1975 and should therefore have also been exempt from social insurance payments and the health and employment levies. But because she didn't understand her entitlements, and failed to claim her pension until 1984, the State not merely refused to pay her pension arrears but demanded that she pay arrears of the levies.
The Ombudsman's report cites her letter to the Revenue in 1985: "You mean to tell me, if I had collected my widow's pension from January 1975 I would not have to pay these levies . . . but because I did not collect and have been out of pocket about £20,000 you now expect me to pay £941. "Words fail me. Does it simply mean the Revenue Commissioners can demand money from me, which I do not owe, but I cannot demand money which is rightfully mine? So much for our democracy."
When the Ombudsman's office started to investigate this kind of carry-on, it discovered that there was, in fact, a provision for paying people arrears that had not been claimed, but this provision was, in the best traditions of Irish democracy, a secret. As the Ombudsman's report explained, this secret provision was used only if "the pensioner had been lucky enough to identify the type of ground which might trigger it". And the very existence of the secret provision was not disclosed even to the Ombudsman's office, which had been making representations about these kinds of cases since 1985. Only in 1996 did the office, quite by chance, discover it.
Because of the fine persistence of the Ombudsman's office in highlighting these flagrant injustices, social welfare law was changed in 1997 to make it much easier for people to claim arrears to which they are entitled. But the new arrangements were not retrospective and did not apply to those who had made late claims before the start of 1997. Dermot Ahern's Department of Social, Community and Family Affairs continued to insist that the pensioners who had been denied their money at the time when the State was allowing rich people to evade their taxes would get nothing. The Department estimated that to pay them what they were owed would cost £27 million.
EVENTUALLY, in last year's Budget, Charlie McCreevy made £10 million available to pay off the pensioners who had not received their entitlements, but this still means that they will get only about half of what they are owed. The State will now cover about four years arrears on old age pensions and five on widows' pensions for these people, rather than the three or six months they were originally given. But many people have arrears much longer than this. One extraordinary case highlighted by the Ombudsman is of a woman who ought to have been paid 44 years of her contributory widow's pension but has been given just 134 weeks of payment, amounting to just £6,500. In two other cases cited by the Ombudsman, the differences between what people ought to have been due and what they have got even under the new arrangements are, respectively, £11,000 and £29,000.
So, even now, the State can't quite bring itself to treat the little people with the kind of sympathy and flexibility it reserves for their betters. Even in this most nakedly outrageous of the injustices that went into the creation of the Irish boom, the idea of making some restitution to those who got the sharp edge of the State's double standards can't quite be countenanced.
The letter of the law, so meaningless for the bankers and businessmen, has, for the pensioners, an Old Testament implacability. And if the Government can't get its head around the notion that it might have a duty to pay pensioners what they are owed, how can we expect it to understand the need for retribution and restitution in the wider injustices of the Cayman economy?
Fintan O'Toole can be contacted at fotoole@irish-times.ie