The Revenue Commissioners never gave a "whimper of complaint" to Mr John Bruton when he was Minister for Finance about lack of powers to inspect declaration forms on non-resident deposit accounts.
The Fine Gael leader told the DIRT inquiry's legal team it was "deplorable" that the Revenue did not use a power for which the Dail and Seanad voted. "It's a matter of very serious concern and entirely appropriate for the sort of rigorous inquiry that the committee is now undertaking," he told Mr Paul Gilligan SC.
Mr Bruton, the first of the five former Ministers for Finance to be questioned by the Public Accounts Committee's legal team, held the portfolio from February 1987 to March of the following year.
He rejected suggestions that Revenue did not have the "capacity" to police the DIRT regime effectively, and he had no recall of the Revenue "suggesting to me that the powers that they were being given in regard to inspection of non-resident declarations were inadequate".
He pointed out that the finance legislation he introduced gave the Revenue Commissioners the power to have "across-the-board access to all non-residency declarations". He also said the actual drafting of the section relating to powers of inspectability was done by the Revenue Commissioners.
They had a facility "which is almost unique" of drafting the legislation.
The 1986 budget had been introduced by his predecessor as minister, Mr Alan Dukes. After the intervening general election, Mr Bruton was appointed Minister for Finance and brought forward the Finance Bill, which is based on the budget.
The Fine Gael leader said he initiated the process of self-assessment because of a concern "that the existing system of tax collection in general was not working".
He did not anticipate that the banks would be complicit in defrauding the Revenue. "The creation of the banks was seen as a part of state-building in Ireland. The idea that institutions so key to our national identity might be involved in systematic tax evasion is quite shocking if proven to be so."
Mr Bruton, who said he had received a "second wheelbarrow of documentation", first became aware of SM 263 through the proceedings of the committee and first saw the document last week.
"I did not at any time direct that the powers of inspection granted to the Revenue in the 1986 Finance Act to inspect non-residency declarations be less than vigorously used," he insisted. The "buck" did not stop with him when, as Mr Gilligan put it, "something goes horribly wrong as it did with DIRT tax". Mr Bruton said it stopped with him only if the legislation was not drafted properly or if he "didn't take adequate care to provide the relevant powers to ensure that things that shouldn't happen didn't happen".
Ms Mary Irvine SC asked about the unwillingness to deal with bogus non-resident accounts. She suggested this "culture" was created in 1983 and never changed. Mr Bruton said he was Minister for Industry and Energy at the time, the "most difficult job I have ever had to undertake in my entire political life", so he was not "as au fait with general current political developments during that period where I seemed to live an almost monastic existence dealing with Dublin Gas and things like that".
