The importance of the public hearings into the Deposit Interest Retention Tax (DIRT) controversy, which begin this morning, can hardly be overstated. The Public Accounts Committee has an unprecedented opportunity to examine the State's culpability in relation to bogus non-resident accounts. But, critically, it also has an opportunity to enhance the relevance and prestige of Dail Eireann, as Mr Pat Rabbitte pointed out in this newspaper last week. Should the committee do a good job there is reason to believe that this kind of Dail inquisition can fulfil the role now left to costly tribunals of inquiry, that of investigating matters of pressing public concern. The exhaustive work done by the Comptroller and Auditor General and his staff in their 370-page report on the DIRT controversy, published in June, means that the committee begins its task armed with volumes of detailed evidence.
The report presented a scathing indictment of the tax collection system. At any one time, according to the report, government officials believed that up to 50 per cent of non-resident accounts held by the financial institutions were bogus. To compound the picture, it is clear from the report that senior figures in the Revenue, in the Department of Finance and in the Central Bank were aware of the scale of the problem but were slow to perform their statutory duties. Most of the evasion took place during the late 1980s and early 1990s. But the report indicated that bogus non-resident accounts may still be prevalent among the total non-resident deposit base of about £16 billion.
On behalf of the law-abiding taxpayer, the committee will be hoping to clarify what might politely be called the murky circumstances of the DIRT scandal. How much did the State agencies know? Was the problem industry-wide in the banking and financial sector? Was there a real fear of capital taking flight from the State, as some officials have alleged? How can those charged with responsibility in this area explain their inaction?
The committee can also help clarify one of the issues left unresolved by the Comptroller's report; to what extent was official policy in line with the political direction given by successive administrations. In short, what kind of guidance was given to officials in Finance, the Revenue and the Central Bank if and when they made senior government figures aware of the scandal? In this regard, the evidence of former ministers for finance should be enlightening. It is to be hoped that the committee will also help to resolve the serious conflict of evidence between the Revenue and AIB. AIB maintains that what amounted to an amnesty was offered by the Revenue on unpaid DIRT tax up to 1990. The Revenue disputes this interpretation of events.
There are solid grounds for optimism that the committee hearings - which will be broadcast live on TnaG - will shed some light in the darkness. The committee is said to have prepared meticulously. Its membership includes some of the best and the brightest in the Dail. It is to be hoped that it will perform with distinction - on behalf of all compliant taxpayers.