Stealth amnesty for the super-rich

BY ROBBIE SMYTH


What a difference eleven months can make. Last June, Revenue Commissioner chairperson Frank Daly promised that the 26-County tax collection agency would "stick like limpets" to tax evaders, especially those uncovered in Ansbacher and DIRT type investigations. Daly also promised that many individuals would "feel pain".

Fast forward to last week and the Revenue Commissioners are back to their old ways of amnesties, this time by stealth, and with a double standard in their operations that is penalising small offenders with rigour while offering get out of jail cards to the super rich tax evaders.

Worst of all this is that the Irish banking sector, which were the driving force behind the multi million euro DIRT tax fraud, are still instrumental in facilitating tax avoidance and evasion for their customers.

It has been clear for some time now that it is illegal for Irish residents to have bank accounts outside of the 26 Counties without declaring them to the Revenue Commissioners. The Ansbacher inquiry highlighted this, as did the §346 million collected from financial institutions and the holders of illegal non-resident accounts as a result of the DIRT inquiry. Thousands of these accounts had been opened because the interest on savings would not be taxed as they would in a conventional savings account.

While many ordinary households, facilitated knowingly by their local banks, opened these illegal accounts, some were for relatively small amounts, while the super rich Irish had their funds hidden in much more sophisticated offshore schemes.

The Bank of Ireland had §1.34 billion on deposit in its Isle of man accounts in 2001. Anglo Irish Bank had §731 million with a §561 million on deposit with Irish Nationwide. AIB had §873.5 million on deposit in the Isle of Man with §1.3 billion in its Jersey operations.

Now the Revenue is about to investigate these accounts and has written to the Bank of Ireland to tell them that their tax defrauding customers could get "significant benefits" if they cough up by the end of May.

Tax defrauders should pay a penalty of 100% of their total tax liabilities, but under the Revenue proposals to Bank of Ireland, defrauders will only pay a penalty of between 3% and 10% of their tax liability. As well as getting off without real penalties, the defrauders will not be prosecuted and their names and the details of their tax settlements will not be made public.

The Revenue have stated that this has been policy since September 2002, but why then did they feel the need to write to BoI and remind them of this deal. Also unclear is why the Revenue Commissioners' investigation into offshore trusts is only beginning on 1 June 2003. They have had the power to investigate such accounts since 1999.

Finally, it seems that nothing has changed for the banks, who are still not ensuring their customers are fully tax compliant when opening offshore trusts for customers. In some sense, the blame for the lack of action and double standards does not lie totally with the Revenue Commissioners. The coalition government and particularly Finance minister Charlie McCreevy must shoulder responsibility too.

They have bent over backwards to provide tax amnesties while refusing to act on reforming the tax code and cleanse it of its culture of loopholes and avoidance schemes for the rich. Worse still, they have been singularly unprepared to take on the banking community, who it seems are above the law in Ireland. The §227 million they paid in DIRT penalties is a pittance compared to their real profits. So it seems that it's just another week of business as usual for the coalition and just another double standard too.