asked the Minister for Social Welfare whether he has investigated the problem of the black economy in the forestry industry where some estimates suggest 1,000 people are working and claiming dole and/or evading tax; if he will make a statement on the proposal put forward by the Union of Professional and Technical Civil Servants to resolve this issue.
Written Answers. - Forestry Industry Black Economy.
90.
On 23 January 1989 I met a delegation from the Union of Professional and Technical Civil Servants to discuss the problem of the black economy in the forestry industry where, it was alleged, many persons are working and claiming unemployment payments and/or evading tax.
My Department have been aware for some time that employment in the forestry industry is an area prone to abuse of the social welfare system. That is why the forestry industry in County Wicklow was selected for investigation in 1987 by the Joint Department of Social Welfare/Revenue Inspection Unit set up in September 1986.
It is also the reason for including forestry among the four industries scheduled in the Social Welfare (Notification by Employers of Commencement of Employment) Regulations, 1988 — S.I. No. 296 of 1988 — which came into effect on 1 January 1989 and which requires employers in the scheduled industries to notify the Minister of the commencement of employment of each employee taken on after that date. Details returned in relation to employees include name, address, and RSI number.
The Union of Professional and Technical Civil Servants put forward three recommendations on how, in their opinion, the problem of the black economy in the forestry industry should be tackled.
The first recommendation involved the introduction of a withholding tax system for all contractors and sub-contractors in the absence of a tax clearance certificate. The Revenue Commissioners are currently considering the merits of this recommendation.
The second recommendation proposed that a certified statement including names, home addresses, RSI numbers and amounts paid be obtained by forestry for contractors, sub-contractors and employees in all cases.
As I have already mentioned, forestry is one of the four industries scheduled in the Social Welfare (Notification by Employers of Commencement of Employment) Regulations, 1988. Notifications required under this legislation should be an important factor in curbing the operation of the black economy in this sector.
These existing regulations, however, apply only to persons employed under a contract of service. Many persons in the felling and harvesting of timber are employed as sub-contractors, that is, under a contract for service, and as such they are not covered by the regulations, except in relations to employees taken on by them under a contract of service.
The Social Welfare Bill 1989 circulated to Deputies on 27 February 1989 will bring sub-contractors within the scope of section 15A of the Social Welfare (Consolidation) Act, 1981, and this provision will enable me to extend the existing regulations to require notification to be made in respect of those employed under a contract for service.
The third recommendation by the union was that my Department and the Revenue Commissioners be notified by the Forestry Section of the Department of Energy of all available information as a matter of form.
In this regard I have to say that my Department gets full co-operation from the Department of Energy in the matter of any relevant information. Since the setting up of Coillte Teoranta I have been assured by that semi-State body that the level of co-operation which existed between the Forestry Service and my Department will be maintained.