Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 27 Apr 1989

Vol. 389 No. 3

Ceisteanna—Question. Oral Answers. - Tax and Welfare Fraud.

6.

asked the Minister for Social Welfare if he will outline the outcome of the inspection of tax and welfare fraud conducted by the Joint Revenue-Social Welfare Inspection Unit established in September 1986; and if he will make a statement on the matter.

The Joint Revenue-Social Welfare Investigation Unit, drawn from the inspectorates of the Revenue Commissioners and the Department of Social Welfare, was set up on a pilot basis on 1 September 1986. The activities of the unit were concentrated in the area covered by the Dublin taxes districts. It is staffed by one social welfare supervisor, two social welfare officers and two Revenue inspectors. The objective of the unit is to secure maximum compliance with the social welfare-tax legislation. Although initiated as a pilot scheme such has been the success of the unit that it has now become a permanent feature and is in the process of being expanded nationwide.

From the beginning, the unit decided on a "sector by sector" approach. They selected enterprises from sectors known to have a high incidence of tax and social welfare evasion and fraud. These enterprises are then subjected to comprehensive investigation of tax-social welfare compliance in respect of both the enterprise itself and of its employees.

Since the setting up of the unit three sectors have been investigated: tree harvesting in the Forestry sector; the Security industry; and the hotel industry. As well as these sectors they have also been involved in some "one off" operations where there were strong grounds for suspecting that fraud and evasion were occurring.

Up to 31 December last, the unit had completed some 247 inspections of various enterprises. It recorded an estimated £2,300,000 of unpaid arrears of PAYE or PRSI in the cases investigated and it collected cheques to the value of over £800,000 in respect of those arrears. The collection of the remainder is being pursued in the normal way by the Collector-General of Taxes.

Of the approximate 3,000 employees in the firms concerned, some 250 were found to be improperly drawing social welfare payments while working, at an estimated cost of some £13,000 a week. Termination of further benefits and recovery of overpayments were put in hand by the Department of Social Welfare.

The joint investigation unit has been particularly successful in identifying and tracking abuse in the black economy and arrangements are at an advanced stage to expand the unit by an additional 17 officers and to extend its activities throughout the country.

Given that about 8 per cent of the 3,000 employees in the firms inspected were engaged in some kind of fraud, can the Minister tell us if he is going to expand the unit to such an extent that it will be able to carry out a more comprehensive investigation of other sectors of the economy, in particular the motor trade where there is huge scope for the black economy to flourish? In relation to the figure of £13,000, is this the amount paid out in social welfare?

That is the amount paid out in social welfare.

Obviously, I take it that in those cases no tax was being paid. Is the amount outstanding included in the figure of £2.3 million?

The arrears would be.

Can the Minister tell us if the Department will be pursuing the employers and employees as the case may be to ensure that the sum outstanding will be paid over to the State? Finally, can the Minister tell me, given that the hotel industry was one of the sectors investigated, why this sector was not included in the new commencement of earnings scheme?

To answer the Deputy's last question first, those sectors considered to be the worst at that time were chosen. Great difficulties can be experienced in setting up such an operation. Once it is up and seen to be going well the intention is to extend it to other areas. I will bear the Deputy's views in mind. I should point out that 125 subcontractors were detected, of which only two were registered for PAYE and PRSI purposes. The Deputy will be aware that I was recently given the power in the Social Welfare Act to bring in similar arrangements for subcontractors and these will come into effect as soon as it is administratively possible to do so.

This unit does not require big numbers of staff but it does require the assistance of Revenue Commissioners' staff. Since the unit was set up the legislation has been changed somewhat. It has strengthened the hand of social welfare officers. Up until then they could not gain access to records. Therefore they will be able to gain a certain amount of the information which could only be obtained through this method previously. The intention is to extend the unit's activities throughout the country.

Given that this pilot scheme was set up by the previous Government three years ago and obviously has proved its worth, can the Minister explain why there has been such a delay in expanding the scheme nationwide? Since it has been producing these results, surely the obvious thing to do is to expand the scheme nationwide? This should have been done shortly after the Minister coming into office.

At that stage the scheme was only commencing. The Deputy may remember that we have had an election and a number of other interruptions in the meantime. I have given due credit to our predecessors for coming up with the idea. As the Deputy will know, I am very anxious to have this scheme expanded. However, it is not very easy to get additional staff as, again, the Deputy will be aware, but I have managed to do so. Having said that, as I indicated to Deputy Harney, we need the co-operation of the Revenue Commissioners — it is not solely my function — who have to provide staff for us.

Is the Minister suggesting that they are not happy with this?

They have been fairly stretched. We will also be looking for staff with experience. Last year they were involved in collecting a vast amount of money. They now have the additional staff to enable them to join with us.

Top
Share