It was "facile" to suggest that the Revenue Commissioners could have acted in the 1980s without considering "the serious economic difficulties" of the time, the chairman of the commissioners told the committee.
Mr Dermot Quigley was addressing criticism of the Revenue Commissioners' conduct in the mid to late 1980s and the early 1990s. He said "some commentators" were making "a facile argument" that "the serious economic difficulties" of the time "were no concern of Revenue".
"While jealously asserting the independence given to us in dealing with the assessment of tax, it is wrong to suggest that Revenue, a major and vital element in public administration, can act without any reference to the economic climate as reflected in the legal framework given to us. Tax administration in a vacuum is an unrealistic concept."
He said if Revenue had acted in a manner which damaged the economy he had "no doubt that the organisation would have been severely castigated for acting irresponsibly".
It was only since the passing of the 1999 Finance Act that the Revenue "could effectively police DIRT". That Act gave officials the power to "get behind non-resident declarations" and look at documentation to establish whether the depositors were "genuinely non-resident".
Before then, a tax inspector could not "get inside the door of a bank premises to do an audit, except in very limited circumstances". The legislation introducing DIRT 13 years ago had removed the requirement of banks to report interest payments, which the commissioners had regarded as being "very valuable in combating evasion".
The abolition of the requirement was designed to bring the banks in line with building societies, who were not required to make such a disclosure. However, "on several occasions the Revenue had proposed that building societies be brought within the reporting requirement."
He said cases of DIRT evasion came to light "not through the inspection of non-resident declarations but from working of individual cases through audit and other means". Mr Quigley said "notwithstanding the limited powers, Revenue did seek to police the DIRT system as best they could in the circumstances". He praised "the dedication and integrity" of staff who "worked so hard to influence the behaviour of the banks, despite having one hand tied behind their backs . . ."
The commissioners believed that by collecting some £2.6 billion in DIRT since 1986, and by intervening to collect some £42 million "put at risk through particular schemes", they had "acted reasonably" in discharging their responsibilities. They were now using the powers given to them in the 1999 Finance Act to collect unpaid DIRT tax.
