Nothing to fear from reasonable force

Finance Bill 1999

     
The money siphoned out of the Irish economy into offshore accounts only got there because Irish banks were prepared to start the process
``If need be by force'' - Five little words that sum up the attitude of the Dublin Government to combating tax evasion. The words are part of the 1999 Finance Bill which introduces, along with a wide range of other positive measures, a raft of substantial new powers to the Revenue Commissioners.

Revenue officials will be able to investigate individual bank accounts they suspect of being used for tax evasion. Officials will be able, with High Court orders, to enter premises and take away documents.

Toughest In the World


Finance minister Charlie McCreevy, speaking at the launch of the Finance Bill, said that the new laws were among the ``toughest in the world''. McCreevy also said that ``if people have their tax affairs in order they have nothing to fear.''

However, there are a lot of unanswered questions about the powers McCreevy wants to give to the Revenue Commissioners. The first is just what problems does the minister think the new legislation will solve.

McCreevy's view was that the new powers were formulated in response to the recent spate of financial scandals at AIB and Ansbacher. The minister was not prepared to wait for the outcome of the Moriarty Tribunal, even though it has been empowered to advise the government on what additional powers the Revenue Commissioners might actually need.

Tax evasion


So back to the first question, what problem was Charlie McCreevy actually trying to tackle in the Finance Bill? McCreevy is trying to tackle tax evasion. Tax evasion perpetrated by the banking sector, by businesses, by employers and thousands of individual account holders. The experience of the Ansbacher accounts shows that tax evasion happens in an international context beyond the remit of the Dublin Government.

There is no recognition in the bill of this international context.

How will the Revenue Commissioners tackle tax fraudsters who hide their income in offshore bank accounts? Surely McCreevy's bill should have included provisions for penalising banks and financial services companies who open accounts and allow their clients to siphon money out of the 26-County economy when it is clearly evident they do not have their tax affairs in order.

Penalise the Banks


No, it seems that the Revenue Commissioners are going down the same route as the Department of Social Welfare where the focus is on the potential fraud of social welfare claimants, not the employers who time and time again have been shown to be the perpetrators of the greatest amount of fraud.

McCreevy is right though to target tax evasion as being one of the core problems his department faces. However, if he really wants to tackle this fraud he should introduce measures which penalise the companies in the financial services sector which facilitate tax fraudsters. The financial paper chase in the Ansbacher accounts involved funds being moved from Ireland to destinations in London, Europe and the Cayman Islands. The money siphoned out of the Irish economy into offshore accounts only got there because Irish banks were prepared to start the process.

Similarly, it was AIB who opened bank offshore bank accounts for customers who were clearly resident in Ireland. Again both the account holder and the enabling financial corporation should be penalised.

Culture of Evasion


McCreevy needs to look to the EU to act on tax fraud and introduce measures to tackle fraud in an international tax.

The level of powers planned in the bill need to be explained. Are the Revenue Commissioners planning dawn raids on unsuspecting banks and tax fraudsters? Most of the material uncovered by the Moriarty Tribunal has been got through painstaking, time-consuming research. It didn't take the use of force, what it did take was long High Court cases. How many fraudsters does the minister think will be caught by breaking down doors?

The culture of tax evasion was created partially by an acceptance that it was OK to avoid tax by exploiting tax avoidance loopholes in the finance legislation. Tax avoidance is a way of life for the high income earners in our economy. The fact that PAYE workers were not able to avail of these legitimate tax avoidance loopholes has created an acceptance of inequality in the tax code. McCreevy should address this in his bill.

Save As you Earn


It would be wrong though to think that there are only negative aspects in this bill. The proposals to tackle the abuse of Irish-registered, non-resident companies is particularly welcome. The Save As You Earn scheme is a small but positive first step in enabling workers to take a share holdings in the companies they work in.

However another problem with the bill is the failure to come up with a comprehensive plan for rural renewal tax incentive schemes. Rural areas throughout the 26 Counties are crying out for a programme to tackle the economic underdevelopment that is driving farmers off the land and decimating rural communities.

Charlie McCreevy got it half right this week. He needs to look again at what his real objectives are. Does he want legislation that sounds good but does not actually empower the Revenue Commissioners in their work or does he really want to tackle the tax fraud? It's over to you Charlie.

Tax fraud - What McCreevy should do


(1) Penalise the financial sector companies who facilitate fraudsters

(2) Introduce measures across to the EU to tackle tax fraud internationally

(3) Explain how the Revenue Commissioners will use the powers McCreevy wants to give them.

(4) Tackle the inequities in the tax system, particularly the culture of tax avoidance.

CAP protests

Farmers were back on the streets of towns across the 26 Counties yesterday.

Demonstrations were held across 28 towns in protest against the proposed changes in the Common Agricultural Policy (CAP). Next week the agricultural ministers of the EU meet in Brussels to discuss the Agenda 2000 proposals which could lead to substantial reductions in the level of EU funding for Irish farmers.

Both the Irish Farmers Association (IFA) and the Dublin Government want no change in the current CAP funding levels. While everyone wants the best deal possible for Irish farmers it is impossible to ignore the huge inequities in the current CAP system. In 1997, of the £1.6 billion paid out by the EU, over £1 billion went to only 10% of 26-Counties' farmers.

The CAP has failed in its objectives of keeping the maximum number of farmers living on the land and ensuring them a fair standard of living.

Surely the IFA and the Dublin Government should recognise the failures of the CAP in their negotiations.

If they are merely seeking a continuance of the status quo they are doing Irish farmers a grave disservice.

Glanbia

Avonmore Waterford group are changing their name to Glanbia plc. An extraordinary general meeting of the company's shareholders approved the name change this week.

It seals the company's move from being a co-op into being an Irish multinational. The name - `clean food' - shows that image is everything and substance is nothing.

Another company that changed its name in recent years was Suicre Eireann, now called Greencore. Their protest last week that this company has no farming representatives on its board sounds a note of caution for the farmers whose votes turned Avonmore and Waterford from a co-ops into a Plc.

How long will it be before there are no farmers representatives on the board of Glanbia?