Lax views on taxing matters

There was an approach much in vogue some years ago known as "zero tolerance"

There was an approach much in vogue some years ago known as "zero tolerance". No crime, regardless of how small, was to be tolerated.

Clamp down on misdemeanours and rates of serious crime will drop, we were told. It had worked in New York and had become the latest rage here in Ireland.

As with most fads, its time in the sun was short, and after a deal of talk, it simply vanished. And we reverted in this country to our own quaintly selective application of the law.

I was reminded of this when reading the 2006 annual report of the Comptroller and Auditor General, John Purcell, published this week. He has long been one of the heroes of Irish public life, holding the State to account forensically by pointing up areas of overspending and incompetence.

READ MORE

One of his recent examinations concerns the operations of Revenue officials at Dublin airport. He reported he had been informed by Revenue that they had mounted a "blitz" on passengers coming off flights from well-known shopping venues in the US during the autumn and early winter of 2006.

The results of this apparent maelstrom of Customs activity defied belief: only four passengers were found to be carrying goods in excess of the maximum value allowed, namely €175.

This is a cumulative figure, and means that if the total value of all purchases you make outside the EU is greater than €175, then you are bound by law to declare them and to pay whatever duty and Vat is required. Not to do so is an offence.

It is simply not credible that virtually every single individual who went on a US shopping spree last year spent less than €175.

Well over a quarter of a million of us thought nothing of travelling 7,000km to splurge for Christmas. Anecdotal evidence gathered for this newspaper last year suggested that the average spend in the US on purchases alone was between $3,000 and $5,000 per person (which is between about €2,120 and €3,530 per person).

And yet, Revenue remain adamant that the law is not being broken, dismissing as "nonsense" claims that people had carte blanche to bring in as much as they wished.

It does, however, appear from the C&AG's report that the so-called blitz on passengers was difficult to quantify, as no records had been kept of the numbers stopped and searched during the period by Customs officials.

The plain truth here is that everyone knows the emperor has no clothes, and that there is wholesale flouting of a law which in turn is evidently not being enforced. The consequences are multi-layered.

On a superficial level, there is a substantial loss of revenue to the State. Hence the interest of the Auditor General, although he appears to have accepted at face value the view of Revenue that there is no contravention of the law in this area. However, arguably the more profound consequence is the extent to which respect for the law and the taxation system is corroded by the fact that it is being so blatantly ignored by all concerned.

It is worth considering the above in the context of two further pieces of information which emerged recently: the appearance of politicians (Michael Lowry and former senator Eddie Bohan) on the Revenue's list of tax defaulters; and the news that 48 of the country's highest earners pay less than 5 per cent of their income in tax.

Far from being isolated events, these combine to reveal at best a somewhat lax attitude towards financial irregularity, tax compliance and even possibly corruption.

It is not then too wide a leap to argue that this may go some way towards explaining the public view of the current travails of An Taoiseach with his dig-outs and his whip-arounds.

Leaving aside his recent painful contortions at the Mahon tribunal, it was clear that a majority of the public did not have a problem with the fact that Bertie Ahern accepted cash from friends, and subsequently appointed some of those same friends to positions of considerable influence on various State bodies.

After all, wasn't he the man who made it possible for so many of us to be able to afford all those shopping trips to New York in the first place, and wouldn't it be downright spiteful to turn on him now. And at any rate, with so many of us to be found comfortably ensconced in glasshouses, who among us will cast the first stone?

This winter, even larger hordes will pour off planes from the US, groaning under the weight of bulging suitcases.

Of course no one will have purchased goods cumulatively worth more than €175. Of course no one will be making a false declaration by passing through the green, "nothing to declare" channel.

And of course the likes of Ahern, Michael Lowry, Beverley Flynn, and Ivor Callely have never done anything even remotely wrong in their entire lives.

And as for Charlie Haughty . . . sure, wasn't he a walking saint?