Written Answers. - Outstanding Tax.
Michael Noonan
Question:
7
Mr. Noonan (Limerick East)
asked the
Minister for Finance
if he will give details of (1) the amounts of tax now outstanding and (2) the amount of this revenue he considers to be collectable; and if he will outline the steps, if any, he intends to take to ensure that the maximum amount possible of outstanding tax is collected.
I am informed by the Revenue Commissioners that the latest published figures were included in the 1990 Annual Report of the Comptroller and Auditor General and Appropriation Accounts and showed the position at 31 May 1991.
The position at 31 May 1992 will be shown in the next report.
The 1990 report showed a total of £2,718 million in outstanding taxes, of which £426 million was shown as likely to be collected.
The Government has taken unprecedented action in the last few years to improve the administration of the taxation system. Among the initiatives taken were the following: the amnesty in 1988; the progressive development of the self-assessment system and accompanying audit programme for personal and company taxation; a withholding tax on professional fees was introduced; tax clearance requirements have been introduced for public contracts and grants; a new system of tax enforcement by Sheriffs has been introduced; the power to attach assets of tax defaulters has been granted to the Revenue Commissioners; the introduction of new general anti-avoidance provisions; an Arrears Identification and Review Programme was set up in May 1989 with extra resources to pursue those taxpayers who still had outstanding tax liabilities following the 1988 tax amnesty. This is a co-ordinated programme between Inspectors of Taxes and the Collector-General's Office. The provision of additional resources of £1 million in the 1991 budget and £0.75 million in the 1992 budget enabled the scope of that review programme to be further extended in 1991 and continued in 1992. To the end of 1991, some £183 million was collected under that programme; the Revenue Commissioners have put together a new initiative for 1992. This is designed to release experienced staff for an increase in audits and, at the same time, to increase staff numbers engaged in the collection of arrears. A further £45 million is expected from this measure.
Also, in this year's budget, I announced several further measures dedicated to the improvement of collection and the elimination of abuse. Among these are, the extension of tax clearance to licences, permits etc., the extension of the withholding tax to the commercial State sector; the extension of the construction industry tax deduction scheme to other sectors and the strengthening of the legislation governing Revenue's power to attach the assets of taxpayers.
Finally, this year's Finance Act includes provisions which strengthen the powers of the Revenue Commissioners to counter tax evasion and avoidance e.g.: Revenue's power to seek information from taxpayers, their agents and third parties (excluding financial institutions) has been extended; their power to search for information has also been strengthened; the levels of penalties for non-compliance have been increased.
As to results, some of these measures have already contributed to better collection and enforcement of tax obligations as evidenced by the ongoing reduction in outstanding amounts shown in the reports of the Comptroller and Auditor General for the past five years to 31 May 1991: 31-5-87, £4,172 million; 31-5-88, £4,107 million; 31-5-89, £3,501 million; 31-5-90, £2,985 million; 31-5-91, £2,718 million. An overall reduction of £267 million, in the amount outstanding is noted for the most recent 12 month period reviewed by the Comptroller and Auditor General. It is also noted that this reduction occurred in a period during which over £7,000 million in additional charges fell due for collection.
I must emphasise that the Comptroller and Auditor General points out in his report that the Revenue Commissioners estimate that only £426 million of the £2,718 million is likely to be collected. The reason for the difference is that the figure of £2,718 million consists largely of estimates, which were made by tax inspectors in the absence of returns from taxpayers. Therefore, to quote a figure of £2,718 million without putting that figure into its proper context gives a misleading impression. In addition, the Revenue Commissioners' achievement in collecting £183 million of entrenched pre-amnesty arrears since 1989 is quite impressive when viewed against the figure of £426 million.
