Dáil Éireann debate -
Wednesday, 3 Jul 1991

Vol. 410 No. 3

Written Answers. - Income of Self-Employed.

Proinsias De Rossa

Question:

21 Proinsias De Rossa asked the Minister for Finance if his attention has been drawn to the fact that according to the report of the Revenue Commissioners only 4,400 self-employed taxpayers declared an income of more than £25,000 for the tax year to April 1988; if he considers that this is an accurate reflection of the income position of the self-employed in view of the number of high earning professions which would fall into the self-employed category; if he will consider requesting the Revenue Commissioners to review the matter; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds):

I would draw the Deputy's attention to the fact the figures to which he refers are some considerable number of years out of date. Because Schedule D cases were, at that time to which the figures relate, taxed on the basis of previous year's income, the figures appertain to income arising in the year to 5 April 1987.

There are other important qualifications. They relate, it should be noted, to "Total Income", this is gross income after deduction of such items as capital allowances, interest paid in full and retirement annuities. It would be invalid to regard the figures as representing the amount declared to the Revenue Commissioners. The particular figure quoted appertains to cases where the main source of income was a trade or profession. This definition encompasses, as well as professional persons and business proprietors, such persons as small shopkeepers, farmers and others working on their own account.

In making any comparison with other categories of taxpayers, it is important to take account of the historical nature of these figures. As a proportion of the total number of taxpayers whose main source of income derived from a trade, profession, rent or other investment, the number with gross incomes over £25,000 in the 1987-88 tax year came to 6 per cent. For the same tax year, the equivalent proportion of PAYE taxpayers was 5 per cent.

Because of their concern to ensure that all sectors of the community pay their fair share of tax, the incoming Government in 1987 decided on the radical changes to the administration of the taxation code which have since been implemented. Among the changes which were made were the following: the 1988 amnesty was introduced; self-assessment was applied to, among others, the self-employed; the enforcement powers of the Revenue Commissioners were greatly strengthened, e.g. by giving them powers of attachment; withholding tax on professional fees was introduced and tax clearance certificate requirements have been introduced for public contracts and grants.

Some of these changes, and in particular self-assessment, are still in the process of being developed and I can assure the Deputy that if experience shows that they do not result in a fair distribution of the burden of taxation, the Government will take whatever further steps may be necessary to achieve that end.