Dáil Éireann debate -
Tuesday, 17 Nov 1998

Vol. 496 No. 6

Written Answers - Tax Receipts.

Proinsias De Rossa

Question:

58 Proinsias De Rossa asked the Minister for Finance his views on whether the average tax paid by PAYE workers, farmers and the self-employed over the past ten years accurately reflects the income levels of each of these sectors, having particular regard to the fact that the average PAYE worker pays four times more tax than the average farmer; and if he will make a statement on the matter. [23675/98]

Minister for Finance (Mr. McCreevy)

I am satisfied, on the basis of the trend in tax receipts and from the information supplied by the Revenue Commissioners, that the figures given as average tax paid by PAYE, farmers and self-employed are consistent with the income levels for each group. The efficiency of the tax collection system for all sectors of the economy has improved significantly in recent years. The Revenue Commissioners are continuing with their overall successful approach to compliance which is designed, on the one hand, to make procedures easier for those who are trying to meet their tax obligations and, on the other, to pursue people who do not pay on time or at all. Measures taken to improve collection and compliance include modern payment methods including direct debits, programmes to secure returns from those who do not file, the large-scale targeted audit programme which resulted in some £127 million being collected in 1997, the random audit programme which exposes every taxpayer to the risk of audit, introduction of withholding tax and tax clearance procedures, significant use of the power to attach assets of tax defaulters, as well as other strong enforcement measures, new local collection and arrears compliance initiative, measures to tackle black economy operators, and a more active prosecution policy in cases of serious evasion.

Revenue have confirmed that these measures are underpinning the improved compliance in the tax system in recent years. The measures needed are reviewed each year on the basis of Revenue's analysis of the returns and levels of compliance for that year. Farmers are assessable to tax on farming profits on actual income on the same basis as other self-employed taxpayers. The normal self-employed allowances may be offset against farming profits as well as special provisions in relation to stock relief and income averaging. As with all self-employed taxpayers, farmers are obliged to make annual returns of income and pay the appropriate tax by the due dates. Returns by farmers are also subject to audit in the same manner as other self-employed taxpayers. I am informed by the Revenue Commissioners that the evidence currently available from self-employed audits indicated that the compliance levels of farmers are comparable to those of other self-employed taxpayers.

It should also be noted that farmers also pay income tax through the PAYE system on employment income earned outside the farm by themselves or their spouses. This is estimated at £92 million for 1995-6, the latest year for which the relevant data is available, and was paid by 25,324 individuals or couples. In addition, farmers contribute PRSI and levy payments through the self assessment system. Their contributions under these headings in 1997 are estimated at £26 million.