Tax evasion hasn't gone away, you know. To pretend otherwise would be to revisit the nod-and-wink culture of the past where our major financial institutions actively encouraged illegal activities by their customers and Government and State agencies failed to confront the situation. Current, unofficial estimates put the size of the black economy at more than 10 per cent. And while banks and building societies may no longer accept large amounts of cash across the counter or readily open non-resident accounts, tax evaders can find other mechanisms.
For the past two days, the Dail Committee of Public Accounts has inquired into the growth of bogus non-resident accounts and related DIRT matters from the early 1980s. It has sought to explore the extent of the knowledge of senior officials within the Department of Finance and the Central Bank concerning these accounts; their powers and obligations and the actions taken - if any - to deal with the problem. The exercise cast little new light on the situation dealt with by the Comptroller and Auditor General in a lengthy report to the Committee last June. But it permitted current and former secretaries general of the Department of Finance and governors of the Central Bank to defend their behaviour on the grounds of fiscal necessity or Government policy.
Mr Maurice Doyle, Mr Sean Cromien, Mr Paddy Mullarkey and Mr Maurice O'Connell laid the blame for inaction in dealing with bogus accounts at the door of politicians and were sharply assertive in defending themselves. Failure of political nerve was evident. Mr Alan Dukes produced a measure to tackle the issue - that would have required non-resident account holders to swear an affidavit - in the 1983 Finance Bill, but it was withdrawn after heavy lobbying of government and opposition parties by the financial institutions. Evidence of a later agreement between the Department of Finance and the Revenue Commissioners that no move would be made to crack down on bogus account holders was also produced. It set the scene for gross tax evasion.
The financial circumstances of the country were radically different in those years. Governments were drowning in debt; there was no consensus on economic policy; interest rates were three times higher than in Germany and financial institutions wielded enormous influence. But even when economic circumstances improved, there was still political reluctance to confront the issue of tax evasion. Instead, we had successive tax amnesties. The single clear recommendation of the Beef Tribunal - that tax advisers be required to blow the whistle on fraudsters - had to be withdrawn on its first outing to the Dail because of opposition from solicitors. And it was only in this year's Finance Act that the Revenue Commissioners were finally allowed to demand information about an individual's tax liability and accounts from a financial institution.
The process of ensuring a higher degree of tax compliance amongst citizens is a slow one. And we are starting from a very low base. Prison sentences for serious cases of tax evasion are only now becoming a reality. The investigation now underway by the Dail Committee will provide a valuable service if it encourages this and future governments and their public servants to adopt a more aggressive approach to countering tax evasion.