Nothing to fear from reasonable force
Finance Bill 1999
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The money siphoned out of the Irish economy into offshore accounts
only got there because Irish banks were prepared to start the process
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``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.
other 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?
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