(Limerick East) asked the Minister for Finance if his attention has been drawn to the serious difficulties being experienced by doctors in the general medical service scheme as a consequence of applying the withholding tax on professional fees to payments owed to them; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Withholding Tax.
13.
The scheme of withholding tax from payments in respect of professional services by certain persons, including doctors in the general medical service scheme, is provided for in Chapter III of Part I of the Finance Act, 1987. The relevant provisions are being administered in accordance with the legislation.
I have met representatives of the medical profession and a number of meetings have been held recently with officials of my Department about the financial impact of the deduction at source, particularly, in individual cases. I accept that the system can impose significant financial requirements in individual cases. However, the main effect is on a once-off basis.
To limit this effect I introduced clearcut provisions in last year's Finance Act which allow interim refunds to be made in certain circumstances. The Revenue Commissioners have advised me that these arrangements are working satisfactorily.
In my discussions with representatives of the profession I have indicated that I would be prepared to have the working of the system examined in the light of any representative sample of cases which the profession might wish to submit and my Department have made a similar offer.
I repeat this offer now. If the Deputy has specific information about any particular case in which difficulties have arisen in the administration of the legislation I will have the matter examined on receipt of the necessary details.
(Limerick East): I thank the Minister for his very full reply. Prior to Christmas the Minister informed the House that somewhere in the region of £20 million had accrued to the Exchequer from the implementation of the withholding tax on professional fees. How much of this was contributed by doctors under the GMS scheme and what level of interim refunds have now been paid? When we last discussed this at Question Time in the House no refunds had been made.
A sum of £7.5 million of the £20.1 million in 1987 was in respect of taxes withheld under the GMS payments to doctors and pharmacists, the bulk of them attributable to doctors. In relation to the second part of the Deputy's question I do not have the details in relation to any payments but the Revenue Commissioners indicated in January that a sample survey of 12 tax districts showed a relatively small number of claims — 113. In general the claims were being dealt with expeditiously and there was no evidence of complaint about undue delay. More recent inquiries to tax districts have indicated that there are no delays or problems in districts in dealing with interim refunds. Meetings have been held with officials of my Department at official level and we made certain offers which I repeat today.
(Limerick East): At the end of 1987 no refunds had been made. After Question Time or during the week, would the Minister supply me with figures for refunds that have been made? Is the Minister aware that the main difficulty that arises is that there are many doctors in the GMS scheme that operate totally in the public sector and who do not have a private practice and, consequently, the 35 per cent withholding tax applies to their turnover rather than to their income. To get interim refunds they must bring their tax affairs up to date. They must pay up front the tax due for the last tax year and then 35 per cent of their current year turnover is withheld. They are paying full tax plus 35 per cent of their current turnover and in several cases doctors in the GMS scheme are operating on a very low income and they cannot on that income sustain their wives and families. Will the Minister look at the individual cases with a view to speeding up the interim refund or, alternatively, spreading the burden over a number of years while they bring their affairs up to date? There is a real problem and I would like the Minister to take a personal interest in this.
In relation to the first part of the Deputy's question about interim refunds that have been paid, I will see if that information is available and will have it passed on to the Deputy. I accept, as the Deputy says, that the system can impose significant financial requirements in individual cases, hopefully on a once-off basis. When we debated this last year the Deputy was very vociferous in that regard. We should ask the medical profession to accept this offer and have a representative sample of cases the profession might wish to submit given to the Department. We could have those examined and see how we could streamline the thing and it is important that we do that. We are over the worst of it in relation to the impact it has, with the exception of these individual cases where hardship can be caused. However, even in the legislation there is provision for certain hardship cases. We need the information in these individual cases rather than a global condemnation of the system that exists.
(Limerick East): Does the Minister appreciate that the reason there is a low level of application for interim refunds is that to apply, the doctors have to bring their tax affairs up to date.
There is nothing wrong with that.
(Limerick East): Nothing wrong with that, but to bring their tax affairs on a current year basis — rather than up to date — they have to do so on a turnover which is being decreased by 35 per cent and they cannot do it.
That point has been adequately made.
When I asked the Minister shortly before Christmas how much money had been refunded he said the amount was negligible. Now he has information from the Revenue Commissioners that the system is working satisfactorily, yet they cannot give him one simple figure, that is to a penny——
I am awaiting a question.
Is the Minister satisfied on the information given to him to answer this question that he is told it worked satisfactorily but he is not told whether a single penny has been given back by way of refund? Is that the right way to assure the House that the thing is working satisfactorily? He cannot say that even a single halfpenny has been given back to a single doctor.
Had I been asked that I would have given the answer but I was not asked that question.
Is the Minister aware that the health boards have agreed over a number of years with the doctors in the GMS that there are two component parts to the fee given to a doctor in the GMS? One concerns the professional fee involved and the other is the cost of maintenance or provision of surgery facilities. Knowing that, is he satisfied that 35 per cent should be charged on the whole fee rather than on the salary itself?
This House passed that legislation last year.
The Minister brought it in.
Question No. 14.
The Minister has not answered. Is he so satisfied?
I am satisfied. I would not have brought it in otherwise.