Dáil Éireann debate -
Wednesday, 28 Jan 1998

Vol. 486 No. 1

Written Answers. - Construction Workers.

Joe Higgins

Question:

70 Mr. Higgins (Dublin West) asked the Minister for Finance if his attention has been drawn to the fact that leading builders in Dublin are condoning the actions of subcontractors on their sites who are putting pressure on building workers to engage in the black economy by demanding that they accept cash in hand while drawing social welfare payments; and the action, if any, he proposes to take through the Revenue Commissioners to support building workers who oppose these practices. [1950/98]

Minister for Finance (Mr. McCreevy):

I am informed by the Revenue Commissioners that persons employed in the construction industry are classified for tax purposes as employees or as subcontractors.

Where the person engaged is an employee PAYE/PRSI and levies must be deducted. Revenue and the Department of Social, Community and Family Affairs regularly conduct joint investigations under the Joint Investigation Programme to ensure those engaged as employees fully comply with the tax system and to ensure that employers are not facilitating ‘working and signing' arrangements. Allegations of particular abuses are automatically investigated. Facilities have been made available to worker representatives to enable them to bring in any cases where they consider abuses, such as those suggested by the Deputy are taking place, to official notice. In addition, union representatives are entitled to sit on the Black Economy Monitoring Group, which operates under the aegis of Partnership 2000. This group includes representatives from employers, from the unions, from Revenue and the Department of Social, Community and Family Affairs.

There is a special subcommittee of the Black Economy Monitoring Group which deals with the construction industry. Union members of the group are free to call for a meeting of this group, at which any difficulties can be brought to the notice of the Revenue and the Department of Social, Community and Family Affairs.

Sub-contracting is an integral part of the construction industry. Payments to subcontractors come within the relevant contracts system — commonly referred to as the C2 or C45 system.

Under this system, where a principal contractor makes a payment to an unregistered contractor, he or she is required to deduct Relevant Contracts Tax from those payments at the rate of 35 per cent.

Revenue has issued guidelines to the industry setting out the criteria under which a person may be regarded as an employee as distinct from a subcontractor. Principal contractors and subcontractors creating self employment contractual arrangements must sign a declaration to the effect that these guidelines have been considered by them and they are both satisfied that the contract created is a contract of self-employment.

As part of their ongoing audit programme in the industry and by way of a special project which is being undertaken at present Revenue monitor all aspects of compliance in the industry. The special programme is focused on detecting failure by employers to operate PAYE/PRSI and levies from employees and to make the appropriate employers' contribution to PRSI. Extra resources have been devoted to the campaign, which will be conducted nationwide. Where necessary, it is intended that inspectors of taxes will be able to call on the assistance of the Revenue Mobile Service.