Vol. 545 No. 2
61 Proinsias De Rossa asked the Minister for Finance if he accepts the estimates of the Revenue Partnership Intensive Review Group on the Shadow Economy that the shadow economy here would range from £2.95 billion to £5.9 billion, with a potential tax loss to the Exchequer of £0.6 billion to £1.2 billion; the steps he intends to take to deal with this loss to the Exchequer; and if he will make a statement on the matter. [29951/01]
89 Mr. McDowell asked the Minister for Finance his views on the estimates of the Revenue Partnership Intensive Review Group on the Shadow Economy that the shadow economy here would range from £2.95 billion to £5.9 billion, with a potential tax loss to the Exchequer of £0.6 billion to £1.2 billion; the steps he will take to deal with this loss to the Exchequer; and if he will make a statement on the matter. [30118/01]
I propose taking Questions Nos. 61 and 89 together.
I am informed by the Revenue Commissioners that over the years a number of economists have attempted to measure the shadow economy in various countries. This has proven extremely difficult and there is no measuring system that economists regard as definitive or even reliable. For this reason, the figures referred to in the question, which I understand are derived mechanically from calculations outlined in economic literature, merely give some guesstimate of potential scale.
Tax evasion is a matter for the Revenue Commissioners who work closely with the Department of Social, Community and Family Affairs in combating shadow economy activity. In their statement of strategy, covering the three year period 2001-03, Revenue has undertaken to examine the feasibility of Revenue itself measuring the tax gap, that is the amount of potential taxation that is lost through evasion, including the shadow economy. The paper to be published following this examination may provide some much-needed information in this area.
The Revenue Commissioners inform me that they have a comprehensive range of strategies to combat the shadow economy and these are set out in their statement of strategy. They include, inter alia, increasing the resources that are devoted to compliance and audit programmes, making full use of computer-based information-matching facilities and increasing the number of prosecutions and convictions by establishing a special prosecutions division.
In addition, the Revenue Commissioners have embarked on a complete reorganisation of its operations at head office and at local level including, for example, a new large cases division, focusing on large customers and an operations policy and evaluation division which will advise on best practice and conduct research including on tax evasion. It is expected that some of the new divisions will come on stream early in the new year. The restructuring contains a number of elements designed to improve the handling of tax evasion.
