Derek McDowell (Labour)

I move:

That Seanad Éireann notes:

1. the very small number of criminal convictions secured by the Revenue Commissioners in relation to tax offences;

2. the apparent reluctance on the part of the Revenue Commissioners to have revenue related offences prosecuted in the courts;

3. the failure in particular to seek or secure convictions for offences arising out of the 1993 tax amnesty;

therefore calls on the Government to take whatever action that may be required to ensure that the law is effectively enforced, including, if necessary, the transfer of responsibility for the prosecution of offences to a body other than the Revenue Commissioners.

This motion deals specifically with prosecutions arising from tax evasion. The resolution makes three points: that the provisions of the tax amnesty that were to act as a stick have not been enforced as rigorously as they should have been and even now, 11 years later, they should be more rigorously enforced; the general powers of the Revenue Commissioners to institute criminal prosecutions have not been used as often or as rigorously as they should and that they should be used more often in future than is currently the case; and if the Revenue Commissioners do not have the will power or are unable to do this, we should allow other State bodies, such as the Garda, the CAB or others, to do it

We are not talking about the small man making an innocent mistake or pushing small businesses to the wall if they are a couple of months late with their VAT returns. This resolution is about serious tax evasion and those who consistently develop schemes to evade tax and defraud the Revenue Commissioners and the taxpayer. We are talking about people who take it for granted that they, and they alone, are entitled to freeload on the services paid for by the rest of us — people who are criminals and should be treated as such and prosecuted.

I acknowledge the political background to the tax amnesty. The Labour Party was in power with Fianna Fáil when the amnesty provisions were introduced in 1993. I was on the Government backbenches at the time and many in the Labour Party were unhappy with the tax amnesty then and have become even more unhappy about it since. It is important, however, to remember that we voted for it because we knew the Exchequer was not as bountiful in tax resources as it is now and because we were reassured by the then Minister for Finance, who is now Taoiseach, that the enforcement provisions contained in the 1993 Act would be rigorously applied in the future.

The Act set out in detail tranches of liability for those people who failed to make a proper declaration, made an improper declaration or who did not use the amnesty. It stated that such people could and should be prosecuted. The amnesty was not voluntary — people who had unpaid taxes in 1993 were obliged by it to pay up, with a decent discount, and to come clean.

Failing to do that was, and remains, a criminal offence and should have been prosecuted as such. That is why it is difficult to understand why, based on the response the Minister for Finance gave yesterday in the Dáil, there has not been a single successful prosecution for failure to comply with the 1993 amnesty. Section 9 of the Act has never been used in the courts although there are tens of thousands of people who did not comply with the terms of the 1993 amnesty. Tens of thousands of people who had bogus non-resident accounts did not comply with the amnesty and thousands of them also did not comply with the 2001 voluntary disclosure scheme. I have every sympathy for the small business man who lets his VAT deadline slip by a couple of months but I have no sympathy for people who have been given the benefit of statutory schemes not once but twice to come clean. They have not just failed to do so, they have refused.

The Labour Party believes that such people should be prosecuted and pursued through the courts not just to get back the tax, but "pour encourager les autres", in the words of Marie Antoinette. Criminal prosecutions act as a serious deterrent to those who would evade tax. The penalties and interest are hefty but in cases of serious evasion, there should be prosecution through the courts. It is remarkable that has not happened.

The Minister for Finance said in the Dáil yesterday that it had not happened in amnesty cases as a result of the confidentiality requirement of the 1993 amnesty. The Minister knows that the 1993 Act also provides for an investigating officer of the Revenue Commissioners to go to the appeal commissioners to seek permission to go behind the confidentiality certificate issued by the Revenue Commissioners in circumstances where there are reasonable grounds for believing someone has not made a full declaration. It is remarkable that they have done so in only 20 cases and that in almost two thirds of those cases, they were not successful. It is also remarkable that they have tried to do so in so few cases and, although I do not know the details of the cases that failed, that the success rate is so low. It is unacceptable.

I read the Revenue Commissioners report for 2002 and it sounds strong on the issue, stating that it is policy to prosecute cases, particularly high profile cases. It gives examples of the cases where it would be appropriate, such as the use of forged or falsified documents, systematic schemes to evade tax, false claimants for repayment, failure, as distinct from minor delays, in remitting fiduciary taxes and deliberate and serious omissions from tax returns.

On the face of it, that policy is fine but it does not sit comfortably with the experience of so few successful prosecutions. The number of cases investigated in the last six years ranged from 18 to 30 in any given year. Of those, three or four per year were successfully prosecuted before the courts, giving a total of 21 for 1997-2003. In those cases, around half received a custodial sentence and, of those custodial sentences, half were suspended. The number of people who wound up serving time in jail was an average of less than one per year.

That does not sound like an aggressive policy of prosecution; it sounds like a lenient policy. If it is the case that the Revenue Commissioners are pursuing a lenient policy and do not feel comfortable or see it as a priority to prosecute, they should say so. They should come out and say their primary purpose is to raise money, to maximise the take to the Exchequer and that when it comes to prosecuting people in the criminal courts, they do not want to be a part of it and somebody else should do the job. If that is the case, the Garda or CAB should do the job, or they need a specialised unit within the Revenue Commissioners to do it. I accept that Revenue will still have to do most of the investigating but, nonetheless, the prosecution should be undertaken and dealt with elsewhere. However, it must happen on a far more widespread basis than is the case at present because the deterrent factor is important.

The Minister of State might say that in cases such as this there are a number of legal problems, and I acknowledge there are. In cases where people have not paid their taxes, the primary penalty is the interest and the civil penalty they pay. In terms of the monetary loss, in all cases, the penalty imposed on the individual concerned is likely to be far higher than any fine they might have to pay. Nonetheless, there is an importance in prosecuting. Whatever about the shame of having one's name printed in a newspaper for having made a settlement over a certain amount, there is a far greater shame and stigma attached to prosecution and to being convicted in the courts. It is necessary for the Revenue to take a view on occasion that what should be done in a particular case is to secure a criminal conviction. If that means delaying pursuing the matter of civil penalties, that is what should be done because it needs to be done simply on the basis that it is a deterrent.

There is an issue of self-incrimination. I was interested to hear what the Minister said on this issue in recent days. In effect, he said that if a person makes a voluntary full disclosure, he or she is immune from prosecution. I understand that argument. It would encourage people to make a voluntary full disclosure if they can at least be assured that they will not be prosecuted through the courts and the penalty will be simply a monetary one. The Revenue would seek to encourage people to move in that direction. However, I am strongly of the view that there needs to be a balance in this regard. While that approach might be good in most cases, it is not good in all, and it is necessary to make an example on occasion by foregoing the civil penalty and going down the road of criminal prosecution.

I acknowledge that the Revenue in recent years has very much sharpened up its act in terms of special investigations. A great deal of money has been brought into the Exchequer as a result of the special investigations carried out into the scandals that came to light during the course of the 1990s. I refer to Ansbacher Cayman, NIB and so on. The total take from those various investigations is approximately €1,000 million or a little less. Those investigations have sent out the right signal. That they have been carried out quite rigorously, in so far as we can judge from the outside, has made it clear to people, who might have been inclined in the past to hide their money offshore, that offshore is no longer out of sight, beyond the reach of the Revenue Commissioners or, for that matter, beyond the reach of Irish law. Good work has been done in this regard and it would be churlish of me not to acknowledge that the Revenue has done a fine job in recent years in this area.

The resolution we propose to the House is specifically on the issue of criminal prosecutions. It is to make the point, and I again make it forcefully, that in dealing with amnesty cases, in particular, and some high profile cases, of which we are all aware, this is a road which also must be taken.