The Bank of Ireland announcement that it has paid £30.5 million in overdue DIRT tax, interest and penalties, represents the first tangible result of the hearings last year by the Public Accounts Committee (PAC). Bank of Ireland was by no means the worst offender; it is a welcome development that it has paid up and that its chairman, Mr Howard Kilroy, referred to its non-payment as an "unhappy episode" at yesterday's annual general meeting of the bank. In total, the Revenue is auditing 37 financial institutions in the wake of the PAC hearings and Bank of Ireland is the first to settle. A number of other banks will also face considerable bills. AIB Group appears to have a substantial liability, the precise scale of which is yet unclear. Most of the other financial institutions will also face payments of a lesser magnitude. It is not money of a scale that will make a substantial difference to the Exchequer coffers - which are already awash with cash. But it is important that it be paid and the rest of the financial institutions should now follow Bank of Ireland and settle as soon as possible.
The deal struck by the Revenue sets one important precedent. The bank was assessed to owe £12.75 million in tax, but paid a further £17.75 million in interest and penalties. The Revenue will no doubt be pressing the other banks to pay similar penalties in relation to their underlying liabilities.
The banks have been the prime target of criticism on the DIRT issue. But it is important to remember that while the banks were liable to pay the DIRT bill, they were doing so on behalf of tens of thousands of depositors who were hiding money from the Revenue Commissioners by putting it in bogus non-resident accounts. Indeed, the sum owed in DIRT tax is just the tip of the iceberg. Many further millions of pounds will be owed in unpaid income and capital taxes on the money deposited in these accounts. The Revenue must also try to reclaim this money - it would make sense for them to focus on those who hid substantial sums in bogus accounts.
The members of the sub-committee of the Public Accounts Committee which held the DIRT hearings, chaired by Mr Jim Mitchell, are to be congratulated on their work. The committee also recommended that the banks make further reparation to society by foregoing dormant accounts and paying a once-off levy. The Government has already acted on the dormant account issue, although gathering this money is likely to be difficult as many people leave funds in banks for lengthy periods. Some of the other measures suggested by the PAC may be worth examining. But the key issue is that the tax due is paid in full, complete with interest and penalties. If this is the outcome, then the PAC hearings will be seen to have served a very useful function in highlighting widescale tax evasion and ensuring that the money owed was paid.
The tax abuse in bogus accounts is part of a wider picture of tax evasion through the 1980s and early 1990s. Many millions of pounds were salted away by wealthy individuals who had access to sophisticated tax evasion schemes - such as the Ansbacher deposits. It is not enough that the banks pay their dues, it is equally important that these individuals pay what they owe, if credibility and confidence is to be restored to the process of tax collection in this State.