The main focus of debate in the 1999 Finance Bill has been the proposal to give new powers to the Revenue Commissioners. The Government's decision to tackle tax evasion has received a general welcome; it could hardly be otherwise in the wake of the revelations of the past year. However there has been criticism of specific measures proposed in the Bill, with some arguing that they would give the Revenue too much power.
The reason why the Government has acted is clear. We are now learning that in the 1980s and the early 1990s tax evasion was rampant. Irish depositors had millions of pounds stashed in the so-called Ansbacher deposits. There were tens of thousands of bogus non-resident accounts in AIB. NIB sold offshore bonds which, it appears, were used to hide money from the Revenue. And the Tanaiste, Ms Harney, has said that authorised officers working on her behalf have found evidence that a large number of well-heeled business people believed in doing everything possible to evade tax.
As the evidence unfolds, it is clear that the Revenue Commissioners chairman, Mr Dermot Quigley, was correct when he said on RTE radio on Friday that public confidence in the tax collection system has been severely dented. There has always been a suspicion in the public mind that there is one set of rules for a group of influential individuals and another for the rest of us. But few can ever have believed that we would see such clear evidence as has unfolded in the McCracken and Moriarty Tribunals and in the NIB and AIB affairs.
Whatever the rights and wrongs in terms of tax legislation, those who see a large portion of their salary disappear automatically through the PAYE system can hardly credit that an Appeal Commissioner rules that the former Taoiseach, Mr Haughey, owes no tax on gifts of over £1.3 million received from Mr Ben Dunne. We now know, of course, that Mr Dunne's generosity was such that the full total of donations to the former Taoiseach was considerably larger.
The new powers proposed for the Revenue should help its officers to tackle evasion. It will now be able to look into bank accounts much more easily, when it suspects tax evasion. It will also be able to probe the ownership of offshore accounts held here - such as the Ansbacher deposits. It is proper, of course, that these new measures are properly debated as they go through the Oireachtas and that, if appropriate checks and balances are needed, they are put in place. Proposals, for example, for a new tax Ombudsman to oversee the Revenue's operation or the extension of the existing Ombudsman's powers into this area may merit consideration.
Much will also depend on how the Revenue uses its new powers. Put bluntly, if it takes a heavy-handed approach in minor cases, while the public continues to see major tax evasion go unpunished, then confidence in the system will be further eroded. Instead, the new powers must be used to target cases of significant tax evasion, while the Revenue must also prove that it can be successful in pursuing criminal prosecutions of such cases. The Revenue has become much more efficient and effective in its operations in recent years, but it still has a job to do to rebuild public confidence in the tax collection system.