Among the highlights of the Finance Bill 2004 are measures aimed at encouraging investment in key areas as well as enhancing the powers of the Revenue Commissioners to examine accounts held in the foreign subsidiaries of Irish banks and building societies.
The primary focus of the business sector will be on the detail of new reliefs designed to encourage investment in research and development and in the establishment of corporate holding and headquarter operations here. As the corporation tax rate here is already low, some will question the necessity for such new reliefs. However, given the need to foster high-level investment - particularly in the research area - it is worth seeing if such measures can have the desired impact. But it will be important that they are kept under close review.
The Minister for Finance has been criticised for the decision to extend the life of a range of other reliefs, mainly based on property, until mid-2006. Such provisions may have had a justification in the past but, more recently, many have been used as tax avoidance devices by wealthier individuals, often with little wider economic benefit. The decision to extend their life beyond the original abolition date of end-2004 is thus unwelcome, particularly in a year when so little was available to ordinary taxpayers.
The extension of the power of the Revenue Commissioners to examine accounts held in the offshore subsidiaries of Irish banks is designed to copperfasten the Revenue's ability to conduct an investigation now under way. In some cases, substantial settlements have already been made.
This is part of a wider picture where the Revenue has been pursuing defaulters who availed of a range of schemes which have come to light in recent years. It is vital that these investigations are pursued vigorously and that all the tax owed is collected, together with interest and penalties.
The Revenue has still to show also that it can successfully prosecute cases of serious evasion now in the pipeline. The report on Revenue powers published yesterday by the Department of Finance will lead to debate on whether further legislative changes are required.
More remains to be done - and not only in chasing up past evaders. Tight finances in the past few years have meant the tax burden is creeping upwards. Conditions may ease a little over the next couple of budgets, but the onus will remain on the Government to achieve efficiency and fairness in both its tax and spending policies in a time of fairly tight resources.