Aideen Hayden (Labour) | Oireachtas source

I broadly welcome the Finance (Tax Appeals) Bill 2015. As a member of the Joint Committee on Finance, Public Expenditure and Reform, I was involved in the pre-legislative scrutiny of the legislation. I am pleased, therefore, that a number of the issues about which members of the joint committee raised concerns have been addressed in the drafting of the Bill. The pre-legislative scrutiny process has proved a useful way of evaluating a proposed change to the tax code that is perhaps more fundamental than people realise.

I have been struck by a number of issues and it may be useful to place them on record. The joint committee met one of the Appeals Commissioners. Members were struck by how effective the current appeals process is and the incredible work that is done by a team of four people, consisting of two Appeals Commissioners and two members of staff. I understand the annual cost of the Office of the Appeals Commissioners is €447,000 per annum. The service the office provides to the general public is highly successful.

One of the issues that arises in the context of the legislation is transparency in the tax code. In an international context, transparency is highly desirable, particular for those who want to do business here, as they will seek clarity and transparency around the tax code. No one disputes the need for transparency. One of the proposed changes was to have all appeals heard in public. A number of stakeholders and members of the joint committee raised concerns about this proposal. The first of these was that Ireland is a small country. While a number of members indicated we should align the system with those in place in larger countries such as the United States and Canada, a number of other stakeholders pointed out that in a country with such a small population - there are only approximately 5 million people on the island as a whole - having all appeals against Revenue decisions heard in public would have a negative effect in terms of achieving the desired outcome of bringing about the level of engagement that people should have with the tax system and the transparency desired. I am pleased this concern has been addressed in the Bill. I understand the Revenue Commissioners agreed that public hearings could act as a disincentive to people considering lodging an appeal against a Revenue decision. The provision that private information related to the family should not be brought into the public domain solely on the basis that a person wants to appeal a decision of the Revenue Commissioners is a positive step.

The fundamental change the Bill makes is that all appeals will be held in public, except where a person requires that an appeal be held in private. Under the current system, all appeals are heard in private. One of the criticisms made of the current position was the lack of transparency arising from the failure to report decisions, in other words, the failure to record them on the website of the Office of the Appeals Commissioners. From memory, the Appeals Commissioners responded to this criticism by pointing out that the service has four staff with which to deal with 400 cases per annum. They indicated that they could place all the necessary information on any website if they had more resources. It is important to bear this in mind when we decide to throw the baby out with the bath water. Sometimes we need to be conscious that systems may work more effectively without the introduction of fundamental changes.

I am disappointed that one or two of the recommendations made by the joint committee have not taken on board. The first of these was the recommendation not to remove the role of the Circuit Court as a court of appeal. This recommendation should be noted for the record. I understand one of the reasons it was not accepted was that, as the law stands, the Revenue Commissioners cannot appeal certain cases. I believe they can only appeal cases involving capital gains tax to the Circuit Court and cannot appeal under any other circumstances.

I wonder why the Bill does not simply allow the Revenue Commissioners the right to appeal to the Circuit Court. I am conscious that a number of the stakeholders were aware that having to go to the High Court in a case stated is a much more expensive procedure than taking an appeal to the Circuit Court. On the other hand, I accept that introducing an appeal to the Circuit Court delays the process and makes it less speedy and perhaps less effective because, as was made clear by the Appeals Commissioners, the level of detail required to hear some of these complicated tax cases requires extensive knowledge of the tax code, which is not necessarily available at Circuit Court level. I found this argument persuasive.

A number of the improvements made also remove the necessity to go to the Circuit Court. One relates to the fact that decisions can effectively be heard at a pre-hearing stage. The Bill introduces - if not in fact, then certainly in practice - a pre-hearing stage to the Appeals Commission phase of the process. This is a positive development. On balance, while the joint committee recommended that the Circuit Court stage of a tax appeal be retained, I am not persuaded that it was completely correct in that respect. Having read the legislation in more detail, I do not believe the Bill would have been improved by retaining the role of the Circuit Court.

As I am under time pressure, I will raise other matters on Committee Stage.