Monday 19 February 2018

Revenue overhaul is vital for our future

Taxman must tackle growing black economy instead of simply plugging the leaks, says James Fitzsimons

James Fitzsimons

While our tax system is one of the most sophisticated in the world, it is probably the least equitable. It didn't take a financial crisis to reveal that, but nowhere else in the world was the taxpayer used, like the Irish taxpayer was, to plug the holes in a rotten and ineffective financial system.

The Revenue Commissioners are faced with the daunting task of tackling the growing black economy. Our tax system has been haemorrhaging uncollected taxes to the black economy for decades. Based on the Annual Report of the Revenue Commissioners for 2010, the main culprits were identified as the construction industry, the motor trade, entertainment, leisure and professionals.

The Revenue has been flogging a dead horse in trying to plug the leaks in the black economy. When business is transacted in cash, the paper trail is harder to follow. It takes forensic accounting skills and a lot of time and effort to prove evasion in this area. It takes fewer resources to harvest tax from legitimate established businesses. They may be hard pressed and at risk of default since the downturn, but they need to be more vigilant than ever as the Revenue Commissioners are coming after them.

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