Running up to the Budget, phrases which have not been heard for a decade are re-entering the vocabulary of public debate: deficit, cutbacks, balancing the books, tightening our belts. No sane person would disagree with the need to keep the public finances in reasonable order. The question, however, is whether the burden will be imposed with an even hand, writes Fintan O'Toole
We have been here before, after all. In the late 1980s and early 1990s, when there was an urgent need to get the public finances under control, the weakest paid the highest price. The public services on which those at the bottom of the heap are most dependent were savagely cut. The books, we were assured, could not be balanced by taking in extra revenue because, as our leaders (including Charlie McCreevy) told us, there was no pot of tax gold out there.
Yet, as we know now, there was plenty of money in Ansbacher-type schemes and bogus non-resident accounts. And in 1996, the Revenue Commissioners had €1.8 billion in uncollected taxes on their books, much of it dating back to the 1980s.
Those were the bad old days, of course. But there is no reason to believe that the basic rules have changed. The weak get hammered. The strong get away with almost anything.
If this seems like hysterical sloganeering, just read side-by-side two sober official reports published in recent weeks.
One is the Comptroller and Auditor General's annual report for 2001. The other is the Ombudsman's special report, Redress for Taxpayers, published last week. Each got some media coverage, but their full import is only apparent when you put them together.
If you read the Ombudsman's very fine report on its own, you might get the impression that the Revenue is hard-faced, unbending and implacable. He deals, among others, with the cases of two little people, both compliant taxpayers, both widows of public servants. After their husbands died, they had to raise their children on a pension. Some of the pension money belonged to those children, but the Revenue wrongly treated these payments as income to the widows.
WHEN they went to get this money back from the Revenue, repayments for some years were simply refused on the grounds that there was a five-year limit for refunds. In eight other cases examined by the Ombudsman, ordinary compliant taxpayers were refused interest on the repayment of taxes which should not have been levied. Even more significantly, the Revenue has refused to accept the Ombudsman's findings, adopting a narrow, legalistic and implacable stance.
This aggressive attitude to widows and orphans who actually pay their taxes is not matched by the Revenue's treatment of business people who don't.
The Revenue simply writes off very substantial sums in uncollected taxes every year. In 2000 the total was €104 million. Last year it rose to €140 million. Between 1997 and 2001, €987 million of tax debt has been written off by the Revenue - according to its own figures .
These figures, however, are a substantial under-estimate of the actual sums that ought to have been paid. The write-offs don't include interest and penalties which were legally due or extra liabilities that had been identified in tax audits. And, crucially, the Revenue doesn't investigate a person's full tax liability once it has decided that the tax is not likely to be collected. For all these reasons, it is likely that the amounts written off since 1997 amount to billions of euro.
We know from the Comptroller and Auditor General's report just how dubious some of these write-offs can be. The C&AG cites the case of a property developer with no fewer than 35 companies, each with over a million pounds in turnover. His recent developments - including office blocks, apartments, industrial estates and a shopping centre - are worth over €125 million.
He paid no tax at all between 1970 and 1988. Under the 1988 tax amnesty, he coughed up a mere €79,000.
In 1990 he got a demand from the Revenue for €442,000 in corporation tax. The letter was returned undelivered, and no action was taken for the next 10 years. He was registered for VAT, but managed to get more from the Revenue in VAT repayments than he actually paid in VAT. One of his companies which built apartments and townhouses that sold for €10 million was recorded as dormant.
No corporation tax was paid on a development which sold for €2.5 million. No residential property tax was levied on his own house, which subsequently sold for nearly €4 million, because his declared income was below the threshold. And, just to top it all off, the Revenue actually gave this man four separate tax write-offs, totalling €600,000.
This is just one of a number of equally mind-boggling cases cited by the C&AG. Most alarmingly, he makes it clear that companies are getting tax clearance certificates without even the most basic of checks. Many pubs have been given TCCs without even registering for VAT or PAYE. A company with 60 staff got a TCC even though it filed a "nil" return for PAYE.
Putting the two reports together, you get a stark depiction of the prevailing mentality: hammer the little people, let the big boys away with murder. So guess whose belts will have to be tightened?