Josephine is snaring the tax dodgers and she has the figures to prove it

HERE’S an arresting sentence (possibly in more ways than one): “Our fundamental aim, in all that we do, is to make it easy for people who want to do business with us and to make it difficult for those who don’t.”

That was in a press release issued by Josephine Feehily the other day. Josephine (if I may call her that, never having met the woman) is, in case you don’t know, chairman of the Revenue Commissioners, and she said the above in the context of issuing the Revenue’s annual report for 2007.

Does that sentence, and the report itself, mean what I hope it means? Does it mean we are at last on the way to becoming a tax-compliant culture?

Does it mean more and more people are willing to pay their way — or at least are becoming more reluctant to be caught not doing so?

If it does — and the signs are healthier than they have ever been — it has been a long haul to get us there. We can thank the diligence of the Revenue, for sure, but we can also thank the much-criticised series of tribunals and inquiries that have been such a feature of the last 10 years.

Thank the Revenue, I hear you say? I know it’s more fashionable, or at least it was, to abuse the Revenue. But I have to say that anyone who lived through the 1980s and early 1990s in Ireland, who saw the hardship caused by spending cutbacks in some of the most basic services, would have to pause and wonder.

One of the things we didn’t know then, but have discovered since, was that while the many were suffering, more than a few were living high on the hog. And they were doing it by simply evading the most basic responsibility of any citizen — the responsibility to pay your tax.

What was worse was that they were benefiting from a culture that virtually celebrated tax evasion. I remember back then chatting to an official of the British embassy in Dublin, and the subject of hate mail came up.

To my surprise, he told me that — apart from one occasion — they didn’t really get a lot of hate mail. What was the one occasion, I wondered — the death of Bobby Sands, Bloody Sunday, the sinking of the Belgrano?

None of those historic events, he told me. Sure, they got letters about all those issues and more, but the one time they got sacks and sacks of mail was when the British government put Lester Piggot in jail for tax evasion in 1987. They got even more the following year — including threats from republicans when they took Lester’s OBE from him.

In 1987, Fianna Fáil were campaigning for a return to government using the slogan “Health cuts hurt the old the poor and the handicapped”. And those cuts were hurting, that’s for sure. The cuts were made necessary by the state of Ireland’s indebtedness at the time — indeed, many have argued since that if the cuts had been deeper, then we would have had the Celtic Tiger a lot sooner.

But what caused Ireland’s indebtedness? A variety of factors to be sure, including a crazy spendthrift government in the early 1980s that solved every political problem by throwing money at it — and it was money the country didn’t have.

That government was led by Charlie Haughey who, as we all know now, lived the life of a squire on corruptly-obtained money and surrounded himself with a virtual court that was fuelled by tax evasion.

There’s always been a bit of anti-Revenue culture in Ireland, but it went into overdrive then. The scams and schemes piled up, many of them facilitated and even organised by Haughey’s friends and acolytes. And at a time when PAYE workers were paying 60% rates and higher to try to keep the country going, those in the know ripped the system off on a massive, unprecedented scale.

If the Revenue Commissioners back then knew what was going on, they didn’t appear to be capable of doing much about it. Even as recently as 10 years ago, there was a lot more talk than action.

Take this extract from the 1997 Revenue Commissioners’ report, for instance: “In 1997, the main achievements in our audit, prosecution and enforcement programmes included the design and implementation of an effective prosecution policy for serious cases of tax evasion; the selection of 18 cases of serious tax evasion for criminal investigation; a significant number of cases being referred for prosecution for failure to file tax returns; and total receipts of £149m from effective audit programmes with more emphasis on bigger cases.”

Note the emphasis in that report on the fact that Revenue were preparing to prosecute people and beginning to regard evasion as a criminal matter. Up to that point, they had always regarded tax compliance as essentially a financial matter — if you got caught, you made a financial settlement and got on with the rest of your life.

Now compare that gentlemanly approach with Josephine’s annual report: “Special investigations yielded a total of €132m in 2007. Most of this figure related to the single premium insurance policy investigation (yielded more than €30m) and the Offshore Assets programme (€54m). The cumulative total for legacy investigations is now almost €2.424 billion. There were 14 convictions for serious tax and duty evasion; 1,263 convictions for non-filing of tax returns and a further 500 summary convictions were obtained for various customs, excise and VRT offences. Arrears as a proportion of total gross receipts stand at 1.9% — one of the lowest rates of any tax administration worldwide.”

AND just in case they weren’t busy enough, “drugs with an estimated street value of almost €139m were seized and €494,000 of suspected criminal cash was detained. 74.5m cigarettes and 1,516kg of tobacco, with values of €25.6m and €433,000 respectively, were seized by our customs service”.

It’s an extraordinary change, isn’t it, in a very short space of time. And there’s more to come.

Speaking at the launch of the report, Josephine made it clear she was interested in talking to a lot of people who collect rent from holiday homes abroad, and several other matters. She conveys the impression of someone who won’t be happy until we all come to regard tax compliance as second nature.

And she’s right. It may have taken the Oireachtas DIRT inquiry, the beef industry tribunal, the McCracken and Flood tribunals to wake us all up to the scale of tax evasion in Ireland, but it’s about time we all began to regard paying our taxes as a basic requirement.

In the great bastion of free enterprise, the United States, tax evaders have always been seen as criminals. When they couldn’t get Al Capone for anything else, they got him for that.

But things are changing here, too, and changing for the better. The 7,000 people employed by Revenue are discharging a tough and necessary job efficiently and well. In the process they’re bringing about one of the most radical pieces of climate change we’re ever likely to see, and not before time.