Derek McDowell (Labour)

I am happy to second the motion proposed by my colleague, Senator Ryan. I acknowledge that in recent years there has been a significant improvement in the use of Revenue powers and that the special investigations unit which is responsible for investigation matters, such as the Ansbacher Cayman bank accounts and the offshore accounts has, though belatedly, been successful in bringing home quite an amount of unpaid taxes. However, there are still many people who do not pay taxes.

It is important to put this debate in context. We are not talking of the little guy who is late submitting his VAT or of someone who might be under pressure and postpones payment of income tax for a couple of months. We are talking of serious tax evasion, of fraud, of people who, as Senator Ryan said, in effect rob money from their fellow taxpayers.

There are plenty of those people about. The report of the Comptroller and Auditor General dealing with the matter of relevant contracts tax, RTC, points out that two mega-scams were discovered during last year alone. In one case, 97 individuals and companies, and in the other case 27, conspired together to defraud the Revenue of due taxes. This is organised and shameless. These are individuals who set out from the start to defraud the Revenue of money. They did so not because they were short of a few bob or negligent in making their returns in time. These people deliberately set out to defraud the Revenue of money and they should be prosecuted.

In recent years there has been something on a consensus on this. Before I came to the House today I read the Revenue's statement of strategy in which it made it clear it would use its powers of prosecution more in the future. The Minister for Finance and his predecessor are on the record as saying there will be more such prosecutions in the future. The Revenue set up its special investigations and prosecutions branch a few years ago and said it would pursue more prosecutions, but that has not happened.

I looked at the numbers of custodial sentences in this area, going back to 1997. In that year there were none. In 1998 there were two, in 1999 there was one, in 2000 there were two, in 2001 there were four, and one custodial sentence was imposed in each of the years 2002, 2003 and 2004. That adds up to just a dozen people prosecuted successfully and given custodial sentences, most of which were suspended. In his timely report last week, the Comptroller and Auditor General compares that with 259 prosecutions taken last year for social welfare fraud, in most cases involving a fraction of the money we are talking of in terms of tax evasion. Some 39 of the people involved went to prison last year alone, so that more people went to prison last year for social welfare fraud than have gone to prison for tax evasion as long as records go back.

There is something seriously wrong here. All the rhetoric, all the commitment from Government and from the Revenue to use the powers of prosecution, has not amounted to anything. Is this an incapacity? Is there something wrong in the system which makes such prosecution impossible or difficult, or is it a lack of political will or a lack of will within the Revenue? One must conclude that a lack of will is involved because getting only one successful custodial sentence last year — a sentence which was suspended — defies belief.

If the Revenue cannot do the job, the power should be given to someone who can. The notion of a fiscal prosecutor has been proposed, a sort of DPP for tax cases, who would have particular responsibility for prosecuting tax evaders through the courts. The Law Reform Commission considered this and did not recommend it. However, I found the reasoning of the commission less than totally persuasive. The Revenue will have to put in a far better performance over the next few years if it is to successfully make the case, as it has done before, that taking the powers out of its hands is not the right course to take. We should seriously be considering removing that power, because if the Revenue will not use it, someone else must be encouraged or allowed to do so.

Many of us reluctantly supported the tax amnesty Act of 1993 because it was introduced during the period of the Fianna Fáil-Labour government. We supported it because it imposed an obligation on people to use the amnesty and settle their affairs. It also prescribed quite heavy penalties, including a mandatory custodial sentence for those who did not get their affairs in order.

Some 12 years later, that power has never been used. To my knowledge, not one person has been prosecuted, successfully or otherwise, for failing to use the tax amnesty Act of 1993. One must ask why. Many of the people involved not only got the facility of the 1993 Act but could also have used the 2001 partial amnesty. They have twice refused the opportunities given to them, and the obligations imposed on them, to settle their affairs. It defies belief that not a single person could have been successfully prosecuted for not having lived up to his or her obligations under the 1993 Act.

Everyone agrees it is important to encourage, facilitate and oblige people to fulfil their social obligations and pay their taxes. It is important that court cases are taken. I appreciate that the primary responsibility of Revenue is to collect money and that the Revenue does not primarily see itself as a prosecution service. However, it is important to send the signal that tax evasion is unacceptable and that the necessary action will be taken to ensure that people meet their obligations.