The compliant taxpayer will be dismayed and greatly angered by yesterday's report by the Comptroller and Auditor General into the administration of the Deposit Interest Retention Tax (DIRT) and related matters from January 1986 to December 1998.
The 371-page report represents nothing less than a scathing indictment of the tax collection system. At any given time, government officials believed that up to 50 per cent of the non-resident accounts held by the financial institutions were bogus and several banks and building societies were allowed to cock a snook at the laws of this State. Remarkably, the rogues gallery included the ACC Bank, which is, itself, owned by the State.
Worse of all, the report clearly establishes that those charged with the responsibility of protecting the public interest - the Department of Finance, the Revenue Commissioners and the Central Bank - were fully aware of the abuse but often failed to perform their statutory duty.
In mitigation, Mr Maurice O'Connell, the Central Bank Governor and a former senior Finance official says, in a key section of the report, that the authorities were "totally preoccupied" with protecting the exchange rate and preventing any flight of capital from the State. Everyone agreed, he said, that avoiding tax was wrong but the culture was one of not rocking the boat - "the boat being the exchange rate."
The concerns, raised with commendable candour by Mr O`Connell, were not insubstantial. But they do not fully explain, let alone excuse, the refusal of the relevant authorities to impose the law of this State without fear or favour. All citizens are supposed to be equal in the eyes of the Revenue but the report underlines how some were more equal than others. It is now clear that hundred of millions of pounds were sloshing around in bogus non-resident accounts at the very time when this State was content to impose the most penal tax rates on all PAYE taxpayers - even those on very low incomes. The words of a New York socialite who observed that "tax is for the little people" appear to have a special application in this context.
The Comptroller, Mr John Purcell, and his staff, are to be commended for their impressive marshalling of the facts from no less than 37 financial institutions and several State agencies. The Dail Committee for Public Accounts (CPA) also deserves commendation - its decision to ask the Comptroller to establish the facts has been fully vindicated.
What happens now? The Revenue has already gained greatly increased powers since the various DIRT scandals became known. But the CPA will, at the very least, have an opportunity to tease out the policy of the financial institutions and the various State agencies over DIRT. It is to be hoped that it can resolve the very serious conflict of evidence between the AIB and the Revenue. AIB believed that what amounted to an amnesty was offered by the Revenue on unpaid DIRT tax up to 1990. This is denied by the Revenue.
Critically, the CPA might also seek to establish the kind of political direction that was given to Finance officials, the Revenue and the Central Bank over non-resident accounts. The Government of this State has on two occasions (1988 and 1993) awarded a tax amnesty to defaulters and given an effective carte blanche to the cheats. Several financial institutions and the agencies of State have clearly been culpable in their administration of the DIRT tax. But it is the politicians themselves who must bear primary responsibility for this scandal.