8 April 2004 Edition
Tax surplus hides the lost millions
BY ROBBIE SMYTH
It was a tale of two tax systems this week. One story features the Irish exchequer figures for the first three months of 2004. They showed a 15% rise in tax receipts on 2003 and a tax surplus of €272 million for the first quarter of the year, prompting calls from SIPTU for the government to reverse some of the previous year's social welfare spending cutbacks.
The other tax story featured a consortium of Irish investors who, under the leadership of Derek Quinlan, a former Revenue Commission official, were bidding to buy the prestigious Savoy hotel chain in London.
The Irish consortium is part of a company called Quinlan Private which, according to various media reports, caters for what the financial community likes to call "high net worth individuals" or "hinwris" for short.
This week, the London hotel chain, which includes the Savoy, Claridges and Connacht hotels was sold to Quinlan Private for €1.13 billion. The Quinlan group has a portfolio of properties in Ireland, Europe and North America. The group has been in operation since 1989, when Quinlan set up his tax advisory service. His group owns shares in Dublin's Four Seasons hotel, the International Financial Services Centre (IFSC) in Dublin and other tax break/relief type properties.
One wonders how much legitimate tax avoidance groups like Quinlan's hinwris have racked up over the 140 deals he has competed over the last 15 years. Investments like those in the Savoy hotel again are usually run through legitimate offshore companies and are never liable for tax in Ireland, even though the initial wealth that made the investment possible was created in the Irish economy.
In the same week that Quinlan was in the throes of tense negotiations for the Savoy, where he outbid Saudi businessman Alwaleed Bin Tala Alsaud, reputedly the world's fourth richest person, 15,000 Irish people were writing to the Revenue Commissioners to disclose their offshore bank accounts.
With over €1 billion collected from special revenue operations targeting tax evasion, it is still unclear how much extra tax revenue these 15,000 people will add into the tax collected.
What is clear once again are the significant double standards in how the tax code is applied in the 26 Counties. The Revenue Commissioners are slowly getting around to dealing with some of the illegal tax evasion perpetrated by high earners. What is not being tackled is the maze of legal tax avoidance loopholes in the state's tax code.
The recent Finance Bill actually increased the number of loopholes by allowing international companies site nameplate offices here. It didn't deal with the tax-free status of the stud farm industry and extended a range of reliefs, including those for hotels and car parks, two types of property investments favoured by Quinlan's group.
This Easter week, the hundreds of thousands of PAYE workers in the 26 Counties should be saluting themselves, as it is they and not the wealthy high earners who are funding the development of the state. It is they who are paying for hospitals and schools while the super rich elite are probably spending the bank holiday weekend in one of their sunnier tax avoidance hotels or resorts.
It seems that once again, another Easter will pass where the guarantee to "resolve to pursue the happiness and prosperity of the whole nation and all of its parts" has been forgotten.