asked the Minister for Finance the estimated value of uncollected outstanding taxes from all sources, individual and corporate; and the estimated amounts of taxes outstanding under the various classes of tax raised.
Ceisteanna — Questions. Oral Answers. - Outstanding Taxes.
2.
The figures as regards the level of outstanding tax in relation to the various taxheads at 31 May 1986 are indicated in the following table which I propose to circulate with the Official Report.
Summary of figures as at 31/5/1986
|
Balance Outstanding |
Amount likely to be collected |
|
|
£m |
£m |
|
|
Income Tax |
1,578 |
205 |
|
PAYE |
78.8 |
32 |
|
PRSI |
97.1 |
41 |
|
Corporation Tax |
1,122 |
180 |
|
CGT |
110 |
12 |
|
CAT |
10.3 |
10.3 |
|
Taxes now abolished |
7.3 |
1 |
|
Levies and Health Contributions |
111 |
15 |
|
VAT |
716.8 |
166 |
|
Residential Property Tax |
1.7 |
1.7 |
|
Total |
3,833.0 |
664.0 |
At 31 May 1986 the cumulative outstanding balance of assessments was approximately £3,833 million and the estimate of tax likely to be collected was £664 million.
Largely because of the mechanism of estimated assessments the "outstanding balance" is in no sense an indication of the amount of tax that is actually due for collection or legally liable to be paid. Estimated assessments are issued in order to induce taxpayers to make income returns. When made, these returns almost invariably indicate a much lower actual tax liability.
The amount of £664 million likely to be collected is based on work in progress in relation to all tax years at 31 May 1986. It, too, is an estimated figure based on experience and it takes account of the reductions that are likely to be made on the "outstanding balance" as a result of appeal and other adjustments. It does not represent an amount of tax actually due for collection on 31 May, 1986. In many instances the liabilities had not even been finalished by that date. For example, in the case of corporation tax, money is included in this figure which is not actually due to be paid until a later date in the same year and thus is not outstanding at all, in the sense of being due for immediate payment.
Deputies may be aware that I issued a press release yesterday which dealt with the issue arising in this question. As indicated in that press release I am urgently examining a number of matters in relation to improving our tax assessment and collection system.
We cannot say we are obliged to the Minister for the information because he deliberately gave a press conference yesterday to pre-empt this question from a Member, and that is an affront to the House. When questions are down for answer——
Will the Deputy confine his remarks to asking questions? The Deputy should find an appropriate time to make a speech. I am concerned with preserving order at Question Time.
On the information disclosed by the Minister last night rather than to the House today, would he attempt to explain why assessments are issued by paid officials of the Revenue Commissioners on which payments eventually represent only 17 per cent of the assessments? Would he explain why he and his predecessors in the past four years have presided over such a chaotic system which in effect means that only 17 per cent of the amount assessed for income tax is likely to be collected? Would he attempt to explain how the Government have presided over such a mess, to no effect but which gives rise to a considerable degree of frustration, despite the recommendations of the Commission on Taxation during the past four years?
To deal with the first part of the question, the information given last evening actually facilitates Deputy O'Kennedy putting questions in addition to the one posed by Deputy Molloy. Far from making it more difficult for the Deputy, it makes it easier. Second, the use of estimated assessments has been a feature of revenue collection in Ireland under the aegis of numerous Governments. It was also a practice which caused many difficulties during the brief period when Deputy O'Kennedy was Minister for Finance. Therefore it is nothing new, it has been a feature of tax collection in Ireland for years and years under successive Governments.
However, I accept the basic thrust of Deputy O'Kennedy's question, which is, that estimated assessments issued in order to get taxpayers to comply with requirements with which they should be complying in the first place, namely, the furnishing of proper returns, do give a misleading impression as to the amount of money that is actually available for collection or even due in any sense. That is precisely the reason I am taking steps — on foot of the Final Report of the Commission on Taxation which was only received in October 1985 — to seek to institute a system of self-assessment as far as tax is concerned, under which taxpayers would have an obligation to submit returns themselves, on time, without having to receive an inflated estimated assessment from the Revenue Commissioner. That will lead to more prompt collection of tax, more efficient use of revenue resources, concentrating on where there is a genuine need and the removal of the invidious comparisions that arise from the misinterpretation of estimated assessments.
While I welcome the fact that the Minister has belatedly come around to the Fianna Fáil thinking on self-assessment which we announced and asserted immediately — though the Minister now claims it to be his proposal — would he not acknowledge that the system over which he has presided flies in the face of the recommendations of the Commission on Taxation which I set up five or six years ago because I saw then the need for reform? If it was obvious to me six years ago surely it must have been obvious to this Government four years ago? Therefore, how can the Minister and the Government justifiy presiding over such a chaotic system which is not just inaccurate but imposes extra expenditure on citizens and accountants, the expenditure of more time, and also imposes an impossible burden on Revenue staff endeavouring to cope with what is submitted by way of inaccurate assessments and which it must be clear to anybody is totally and utterly inappropriate? In the light of those facts and the recommendations of the Commission on Taxation would the Minister please explain how he and his predecessors have allowed this mess to continue when, in their last gasp, they say they will do something about it?
The recommendations of the Commission on Taxation in regard to self-assessment were made only 12 months ago in their fifth report. Furthermore, I might say that approximatley 14 pages only of a voluminous report was the total devoted to self-assessment.
That is unfair.
That leaves many detailed questions of practical implementation to be sorted out. What have we done about that since the report was published? We have done the following: first, we have arranged for an outside expert team to come in here — and it takes some time to organise this——
That is the IMF team.
——involving two people who have worked most of their lifetime in the US Inland Revenue, who are dealing with problems of self-assessment. They are at present in this country under the aegis of the International Monetary Fund consultancy service. Second, I have prepared a discussion document, available to me at this time, dealing with the overall question of self-assessment. Clearly the introduction of self-assessment will necessitate major changes in revenue practice in this country and on the part of taxpayers. For instance, if it is to work, much more serious penalities will need to be available for immediate implementation in respect of taxpayers who fail to comply. Study needs to be devoted to what precise penalties are most effective. Also, as I explained to the Deputy in the course of an Adjournment Debate here not so long ago, there is the danger that in the first year that self-assessment is introduced, because of the teething problems, there could be a shortfall in revenue, so that instead of getting more money one would get less in the first year. That is a practical difficulty which I hope the team of experts from overseas who are here at present will help us to overcome. There are a number of other difficulties, which I have outlined in reply to the Deputy on an Adjournment Debate here that need to be sorted out. I am glad to say that the study to which I referred is being dealt with with the height of expedition. I expect to have a report from this expert team before the end of this month. I expect to be able to take decisions on foot of that report next month. That clearly indicates the high degree of urgency with which I and the Government have dealt with the problem of the inefficiencies — and they are acknowledged on all sides of the House — that exist in our tax system.
A Cheann Comhairle, I want——
I know the Deputy would wish to fall in with my desire that supplementary questions should be short, concise and to the point.
——and that answers might be given to the points raised also.
I have no control over answers.
I congratulate the Minister on facing up to this issue. I might pose two questions: first, what was it that brought the Minister eventually to realise that there was a very substantial sum of over £600 million collectable in outstanding taxes, something I had been pointing out for a number of years? Second, assuming that at least 80 per cent of these are collectable taxes — approximately £500 million — will the Minister take them into consideration in preparing his budget and reduce the PAYE burden accordingly, particularly on the lower income groups?
As I explained in my press statement last evening, the whole purpose of improving tax collection is to enable us to reduce the income tax burden on compliant taxpayers generally, both self-employed and PAYE. It is important to acknowledge that, while there are some people in all sections of the community who are not meeting their tax liabilities, likewise among all sections of the community there are a majority who are. It is in fairness to those people that we feel we should give the urgency we are giving to improving tax administration.
I might ask a supplementary arising from that reply ——
Perhaps when we come to the Deputy's own question.
On this question I should like to ask the Minister — while appreciating his very comprehensive reply and his press statement on the amount of money due under the various headings to the Revenue — would he give the other side of the picture and tell the House the amount of money due by the Revenue to hard-pressed taxpayers under the same headings?
That is a separate question.
It is not a separate question; it is very relevant.
Of course it is.
I would suggest that if Deputy J. Walsh puts down a question for written answer next week I will get that information for him.
I put down a question last week and was told that the information was not available. It is regrettable that the information is available on one side with unfortunate taxpayers being batoned by the Revenue while, on the other side, I suspect there are others owed an equivalent amount of money by the Revenue.
I will try to get that information for the Deputy.