The report of the Dail Committee of Public Accounts into the DIRT tax fraud will shock and dismay all law-abiding citizens. The report graphically illustrates how the most central tenet of the tax law - that all citizens must be treated equally without fear or favour - was transgressed. The major banks were allowed to break the law of this State at a time when the average PAYE taxpayer was paying penal levels of tax. Most of the banks have still to utter a word of contrition. Indeed, the chief culprit, AIB has still to respond to the committee's findings.
It faces a stern task in clearing its name. The wholly unconvincing defence mounted by the bank - that the Revenue had agreed to an effective amnesty on DIRT arrears - has been comprehensively exposed by the Dail sub-committee. As for the agencies of State - the Revenue, the Department of Finance and the Central Bank - they stand indicted for negligence, if not incompetence. The Committee is to be credited for the thoroughness of its report. It now falls to the Government to give effect to its principal recommendations. Given the mood of the people in the aftermath of public hearings which exposed widespread evasion of DIRT tax with the collusion of bank officials, the Government would be well advised to adopt a campaigning approach.
Financial institutions must be held accountable in abiding by their statutory obligations. The rules and ethics governing audits and accountancy practices must be changed. And those agencies of the State which failed in their duties must be reformed and restructured. Such root-and-branch reform is a mammoth task, but the unambiguous findings and the tough, unanimous recommendations of the all-party Dail subcommittee allow for no other response.
The committee has made several recommendations including a special levy on the banks; but this must not distract from the central challenge now facing the State which remains to collect every penny owed by the financial institutions.
The failure of State agencies to tackle such widespread fraud caused the sub-committee to demand the passage of a new Revenue Act by this Government to provide a clear and modern framework in law for the Revenue Commissioners, which would enhance its in dependence and accountability. The Central Bank's outmoded approach to supervision and its view that it had no role in dealing with bogus non-resident accounts led the sub-committee to favour the appointment of a single Financial Regulator who would deal with ethics, professional standards and corporate governance within all financial institutions.
The weakness of the report lay in its bland exoneration of a succession of ministers for finance who failed to recognise or deal with a major financial scandal that reached into all corners of society. Effectively, the report blamed officials for the mess and insisted there was no failure of political will. It was a self-serving conclusion.
In an attempt to ensure a positive Government response, the sub-committee set a series of time-limits for the production of reports, recommendations and legislation by the relevant Government Departments. The intention would be to have new legislation, along with ethical guidelines and procedures, in place within the lifetime of this Dail. It is an ambitious goal and a commendable one.