Brendan Ryan (Labour)

I move:

"That Seanad Éireann,

—noting that in 2004, 259 people were prosecuted for Social Welfare fraud amounting to €1 million and that 36 of those were sentenced to terms of imprisonment;

—noting further that in 2004, only 1 person was prosecuted for tax offences and that a custodial sentence was not imposed;

—noting that the amount of tax written off by the Revenue Commissioners in 2004 amounted to €173 million involving over 26,000 separate cases;

—recognising that non-payment of VAT represents a deliberate attempt to defraud both the public and the State;

—believes that the failure to prosecute tax offenders represents a deliberate decision to protect the well off from the full rigours of the law; and

—calls on the Government to take whatever steps are required including legislation, if necessary, to ensure that tax offenders are prosecuted through the courts with the same vigour that is applied to Social Welfare recipients.''

Cuirim fáilte ar leith roimh an Aire Stáit, ós rud é go bhfuil aithne againn ar a chéile le blianta. D'oibríomar le chéile nuair nach raibh mórán todhchaí ag an bheirt againn, a bhí ag léachtóireacht go síoraí. Tháinig athrú ar an saol, áfach, agus cuirim fáilte roimh an Aire Stáit.

I have long wanted to talk about the extraordinary and consistent discrepancy between prosecution and punishment for welfare offences and the prosecution and punishment of tax offences. The issue has been visible for years and has been raised consistently with the Revenue Commissioners. However, they consistently resist the question of prosecution. I will put the facts on the record. According to the report of the Comptroller and Auditor General in 2004 some 36 people were imprisoned after court cases involving social welfare recipients. We have increasing evidence of a ruthless group of exploitative employers based on stories from our immigrant workers in particular. I am not saying all or even most, but some employers have taken advantage of various vulnerabilities to be less than honest, to put it mildly.

Of 476 criminal cases forwarded to the Chief State Solicitor in 2004 only 17 involved offences committed by employers. Of the people who were prosecuted and of those who went to jail, 21 were prosecuted under offences relating to unemployment assistance. These were people who presumably had defrauded the State on a grand scale. Some 12 people committed offences relating to unemployment benefit, two for disability benefit and one for other schemes, which amounts to 36 people. The grand total of money involved was barely €1 million. Nobody defends welfare fraud. I must trust the courts that the people prosecuted, sentenced and sent to prison had committed offences of the scale and gravity that deserved prison offences. While it is hard to believe that offences which on average work out at €4,000 are of the scale requiring people to be sent to prison, one accepts it.

It is extraordinary to consider the treatment of tax evasion in the same year, which was as with every other year. We seem to learn about another tax evasion scam every year. This year it is the construction industry and in other years it was Ansbacher, offshore accounts and bogus non-resident accounts. Twenty years ago we all knew that many people had several bank accounts in which they hid their money. Having been assured that the Revenue Commissioners had all the powers they needed, we discovered later that they had no such powers, that they had great difficulty in inspecting bank accounts and that we needed to make available to them a slew of new powers, which tax-gathering agencies in other countries had taken for granted for years. The IRS in that most free-market of countries, the United States, had vastly greater powers of discovery than the Revenue Commissioners.

After we worked our way through it all, we discovered that nobody goes to prison. I am not a great enthusiast for sending people to prison, as I believe it rarely changes those sent there. However, the prospect of going to prison would significantly change the behaviour of the kinds of people who are consistently not prosecuted. By and large those we send to prison come from a background with a previous family history of being in prison. We send the poor, underprivileged, exploited and marginalised to prison. I believe we do not prosecute those who are most afraid of prison for fear that they might end up there.

An enormous amount is said about tax evasion. It starts from the almost tearful image of brave struggling entrepreneurs whose "own money", as it is termed, is being taken from them by the rapacious State. I will not mention income tax yet, regardless of my feelings about it. In 2004 the Revenue Commissioners wrote off €72 million of VAT that was due to them but could not be claimed. Let us get away from the poor tearful entrepreneur having his money taken and remember what happens here. I can think of two VAT offences which mean that the Revenue gets no money. In one case people collect VAT and do not pass it on to the Revenue and in the other they do not charge it and offer a more competitive price for their goods and services.

The former case amounts to theft from their customers. Let us be clear about the matter. This is not the money of anybody. The customer is paying this tax to the State. Anybody who holds on to VAT, just as with holding on to PAYE or PRSI contributions, is a thief. It is other people's money that they should not have other than acting as an agency for the State and if they do not pass it on it is theft. On the other hand, if they do not charge VAT they are effectively stealing from their competitors as honest providers of goods and services who charge VAT will lose out in their businesses to those who chose not to. Let us walk away forever from this nonsense about the suffering taxpayer. These people are collecting tax on the State's behalf and choose not to pass it on.

In 2004 the Revenue Commissioners wrote off tax in 26,000 cases. If only a quarter of these related to VAT, 5,000 to 6,000 people either stole money from their customers, the State or their competitors. Not one of those was prosecuted for such an act of fraud. The Revenue stated the money was unrecoverable for a variety of reasons and that was it. While the money might well be unrecoverable, the individual or the company must have been identified given that Revenue was aware of these problems and yet none of them was prosecuted. I can only imagine what people would say if the Garda decided, in the case of fraud or theft generally and where it could not recover the money because the person had gone bankrupt or whatever, that it would no longer prosecute the offender because there was no point. How is it that people who steal money from the State in the form of illegally holding on to other people's VAT or not charging VAT are let go scot-free while unfortunate wretches who improperly and illegally claim social welfare payments to which they are not entitled are sent to prison in significant numbers? There is only one conclusion. In the core of the philosophy of the State as epitomised by the Government, now in office for almost ten years, is a perceived difference between the poor and the well-off. The poor are seen as appropriate subjects to prosecute and sent to prison while the rest of us are not. That runs through the entire decision-making priorities of the Government. This is a classic example of the way this Government talks about inclusion, social justice and rights for all yet leaves alone those who have some kind of stake in society.

It is wonderful that the public is beginning to see through this. We are now seeing the public's realisation of the difference between a strong economy and a fractured society. The fundamental issue of which the public has taken note is that in our society there are those who can rip us off and those who are ripped off. Those who can rip us off are regarded as quasi-heroes to be understood — perhaps they made a mistake, maybe they were a little exuberant — while those who get ripped off, in particular the poor, are regarded as the criminals because deep down is a belief that the poor are suspect, that they are responsible for their own impoverishment and need to be watched and punished, while those who get rich at the expense of the taxpayer, their customers and their competitors are regarded as having at worst made a mistake and that at best they deserve our indulgence.

That is the fundamental flaw in Irish society, built on inequality, growing out of injustice and leading into a situation where the difference between those who are on the inside and on the outside becomes greater all the time. We see it in little things like social welfare, in big things like tax evasion, and above all we see it now in employment practice where the Government is tacitly encouraging large-scale exploitation of people at work.