Brian Cowen (Laois-Offaly, Fianna Fail)

Another factor that influences the process of criminal investigations is the level of the powers available to the investigators. Revenue officers, in the course of their work in this area, may identify deficiencies that curtail their capacity to assemble the best evidence in some cases and, as a result of these experiences, suggest matters for inclusion in Finance Bills.

As the Seanad is aware, this Government has a solid track record second to none in introducing legislation to augment Revenue powers in Finance Acts. The chairman of the Revenue Commissioners has pointed out in appearances before the Committee of Public Accounts that almost all of the developments in the pursuit of the major projects undertaken by Revenue could be attributed to the powers introduced by the Minister for Finance in 1999, which allow the Commissioners to examine financial institutions in a way that was not possible previously. In the Finance Act 2005 I introduced a provision I understand is currently being used by Revenue in the ongoing investigation into the use of insurance-based investment products by some taxpayers to evade tax. In addition, I also introduced amendments to section 1078 of the Taxes Consolidation Act 1997 to strengthen the approach to prosecuting those who aid and abet others in evading tax and to create a more general offence of evading tax. These amendments will further assist the drive of the Revenue Commissioners against tax evaders and those who facilitate them.

As the Minister for Finance, my predecessor Mr. Charlie Mc Creevy received the report of the Revenue Powers Group, which examined the powers available to Revenue generally but also considered the area of criminal investigation of tax evasion and made certain recommendations that have a bearing on the matter. In this year's Finance Act I initiated the first measures in a process of reforms in the area of Revenue powers, including a number of the recommendations of the Revenue Powers Group. I intend to return to some of the remaining recommendations that require further consultation and careful consideration for future implementation.

The Revenue Commissioners advise me they are satisfied with the level of success achieved to date in criminal prosecutions for tax evasion in the courts but are determined and confident that their new approach and the establishment of the investigations and prosecutions division will increase the numbers of such cases investigated. It has done so already. The level or severity of the sentences imposed is a matter for the courts but it should be remembered that the impact on a defendant is not limited to the sentence imposed by the court. For example, in one of the cases accepted for investigation in 1999 in which a conviction followed in 2003, a total fine of €1,750 was imposed. However, the convicted person and his company settled their liability to the Revenue Commissioners by paying in excess of €1.65 million, included in which was a substantial civil penalty.

The courts are influenced by the fact that the Revenue Commissioners impose heavy penalties. In the judgment of the Court of Criminal Appeal in the case of the Director of Public Prosecutions v. Redmond, the court stated: "It is plainly not possible for a sentencing court in a case such as this to ignore the fact that other penalties, which may be much greater in amount than the cumulative sum of the maximum fines for those charges, have already been made".

In the course of the large-scale investigation projects undertaken by the Revenue Commissioners in recent years, such as the investigation into the bogus non-resident account holders and offshore account holders, taxpayers who have paid additional taxes are likely to have committed revenue offences. Due to the vast scale of these investigations and the potential they have to lock up Revenue resources for years, the approach taken has been a pragmatic one, aimed at collecting the undeclared taxes together with interest and substantial penalties in the shortest possible time. It would have been impractical for the Revenue Commissioners to adopt a criminal investigation approach in each of these cases and it would have secured far less by way of settlements.

These programmes are continuing and will now focus on the small number of cases that have not come forward. They will be pursued and will be considered as potential prosecution cases and, where selected, will also face the prospect of being prosecuted, where the required evidence can be assembled.

It can be seen from the results and the progress referred to already, that the Revenue Commissioners are very serious about the pursuit of non-compliance with the tax code and the balanced approach being adopted has proven to be extremely successful. Their resolve to increase the number of cases being investigated and referred to the Director of Public Prosecutions is already bearing fruit, with the numbers of such cases at an all time high. The present arrangements are working effectively. The Law Reform Commission in its paper on a fiscal prosecutor and a revenue court, published in December 2004, looked at the treatment of revenue offences, including the workings of the public prosecution system and surveyed the existing system of bringing revenue prosecutions. The paper includes a recommendation that the arrangements currently in place for the prosecution of revenue offences be maintained for a period and then reviewed in a few years. The message should be clear by now. Anyone who hides taxable income or evades tax will be pursed by the Revenue Commissioners.

Unlike others who had the opportunity but failed to do so, the Government backed the efforts to tackle evasion with important and effective legislative initiatives, to which I have already referred. We have provided significant extra resources to the Revenue Commissioners and an additional 400 staff in the audit and compliance area. By comparison to earlier years and having regard to the excellent results achieved on general tax compliance initiatives by the Revenue Commissioners and the emerging results in prosecutions, the Government is not convinced that the existing arrangements for prosecutions needs to be changed.

The real story, then, is of an active pursuit of non-compliance by independent Revenue Commissioners, supported by appropriate legislative change. The real story is one of non-compliant taxpayers being prosecuted and paying substantial interest and penalties. Of course there are more tax evaders out there; no doubt there always will be some but there is substantial and ongoing progress towards achieving a tax-compliant environment in the State, which I believe has improved beyond all recognition, particularly in the last decade.

The Government is determined that tax evasion be tackled and offenders pursued. Unlike those opposite, we back up this resolve by doing something about it. Perhaps that is why the Opposition contents itself with some unfortunately wild, unsubstantiated allegations here and in the other House. It will do it no good and will be seen through by the electorate. I, therefore, ask Senators to support the Government amendment to underline its abhorrence of tax evasion and to recognise the clear policy of the Government to tackle evasion in all our citizens' interests.