Pádraic McCormack
Question:109 Mr. McCormack asked the Minister for Finance if his attention has been drawn to the criticism of the Revenue Commissioners by the Irish Taxation Institute; and if he will make a statement on the matter. [4150/07]
Other Questions.
Tax Code.
I assume the Deputy is referring to the presentation by the Irish Taxation Institute, ITI, to the Joint Committee on Finance and the Public Service on 17 January on the under-claiming of allowances and reliefs by PAYE taxpayers.
I understand the ITI, in its presentation, suggested the introduction of a "one claim, one form" approach for securing tax reliefs. This would be a retrograde step because, under the current system, no forms are required for claiming most PAYE tax credits. Revenue operates a self-assessment ethic and assumes that people are honest. For example, the majority of claims to amend tax credit certificates are made over the telephone, via Revenue's lo-call 1890 service.
Forms are required in some instances, for example, medical expenses relief. Where Revenue requires a form to back up a claim, it generally prompts the claimant to complete the form every year. For example, anyone who claimed medical expenses relief in excess of €1,000 will receive a claim form in the post every year. This also applies in the cases of elderly persons who claim deposit interest retention tax, DIRT, relief. As announced in the recent budget, Revenue is working with the credit institutions to establish a system which would allow the elderly and incapacitated persons to obtain interest free of DIRT from 2007 onwards.
Revenue's philosophy regarding PAYE credits is, wherever possible, that taxpayers who claim once will keep a credit forever. This approach works well for standard credits with fixed amounts. Any suitable credit, once allowed, is generally carried forward from year to year by the Revenue computer system. In addition, many of the more significant reliefs have been made virtually automatic, either through the introduction of tax relief at source, TRS, or the automatic carry forward of the reliefs. For example, mortgage interest relief and medical insurance relief are provided at source through the taxpayer obtaining a reduction in repayments or premiums equivalent to the tax relief. Once claimed, recurring reliefs such as those for trade union subscriptions are allowed on an ongoing basis and reappear each year in the taxpayer's certificate of tax credits.
The ITI also implied that when claims are made refunds are not made in a timely manner. This is not the case and I am assured by Revenue that repayment claims are prioritised and Revenue's published customer service standards for the processing of refund claims are generally met, save in peak periods.
The ITI also urged Revenue to educate PAYE taxpayers about the tax system and their entitlements. I assure the Deputy that Revenue has taken this task seriously for many years. Each year, every PAYE taxpayer receives a tax credit certificate showing the credits he or she has been given. He or she also receives a short leaflet explaining all the standard credits available. It is relatively simple to check the credits given against those available and taxpayers are encouraged to do this. Credit certificates for 2007 are being issued and a press and radio advertising campaign is being built around this process.
From time to time, Revenue has public information campaigns. In 2006, its chairman wrote to every person on the PAYE tax record informing them about the new Revenue on-line service, ROS, and other self-service options for employees. In August and September 2006, Revenue launched an intensive nationwide campaign to encourage take-up of health type reliefs, the waste charge credit and rent relief. The response was encouraging and I am advised that Revenue will run a similar campaign this year.
A wide range of publicity booklets can be found in Revenue public offices and on its website. Leaflets and claim forms for medical and dental expenses are available in clinics, surgeries and pharmacies. More limited information is available on Teletext and, increasingly, Revenue information for the public is being made available in a wide variety of other languages, including Polish, Lithuanian and two Chinese dialects.
All these factors demonstrate that Revenue has long been proactive in its approach to dealing with claims for tax credits and reliefs. I am satisfied that taxpayers are being offered every assistance and advice in relation to claiming reliefs and credits and, together with the variety of service channels Revenue has put in place, they are being given the opportunity to do this in the most efficient and customer friendly way possible.
I thank the Minister for his reply. The criticisms made by the Irish Taxation Institute have a number of worrying dimensions which militate against the view that Revenue is improving its performance. For this reason, it is important to carefully examine the institute's concerns. The Minister adverted to its concern that a high proportion of those entitled to certain reliefs, including medical expenses, trade union subscriptions and nursing home expenses, do not claim them. In other words, Revenue is retaining moneys which do not rightfully belong to it.
The ITI also found a high level of dissatisfaction among professionals — more than 50% — with the refund service. They found high levels of dissatisfaction that the Revenue is not handling complaints satisfactorily. Those are three serious findings. Although the Minister has refused to do so in the past, I ask him once again to arrange for the Revenue Commissioners to undertake a properly based estimate of how much in tax allowances is not making its way to taxpayers. Information is power and the Revenue Commissioners have available to them all the returns of medical practitioners, nursing homes, trade unions and others. They know these values and could easily calculate the extent to which under-claiming occurs. That is the key to making a change. If the Revenue once recognised the scale of the problem, one would see a huge amount of change following from that, both in Revenue's willingness to deal with refunds and other complaints. That is the linchpin of change. I ask the Minister to reconsider his previous decision not to have the Revenue Commissioners undertake such a study.
At the Deputy's request, I will reconsider that matter. The Revenue Commissioners' plan for the development of PAYE through their operations policy and evaluation division is managed by an assistant secretary and contains two substantial units which monitor daily performance of the PAYE system. It plans future improvements and provides a wide range of information leaflets and guides aimed at employers and workers using PAYE. In this context, setting up a new PAYE customer satisfaction unit would be wasteful duplication. The Deputy is obviously not aware of the large number of Revenue staff in place serving PAYE taxpayers. The latest figures available show there is a total of over 1,880 working in customer service areas. Of those, close to 800 are dedicated solely to the PAYE sector. That represents core numbers engaged in customer service duties for PAYE customers. At peak periods, however, temporary staff are recruited and existing staff are moved between functions to alleviate backlogs and speed up response times.
As regards customer satisfaction, I refer the Deputy to a Civil Service-wide survey conducted on behalf of the Department of the Taoiseach in March last year. It found that 78% of general public customers and 81% of business customers said they were "very" or "fairly satisfied" with the level of service provided. Since Revenue is such a significant point of contact for so many Civil Service customers, it is also gratifying for them and indicates a higher level of satisfaction with the staff and the standard of service being provided by that office than the Institute of Taxation's survey might suggest.
As has been said, however, this has been a constructive contribution to the debate and the interactive relationship between these bodies is good. From my discussions with the Chairman of the Revenue Commissioners, which are reasonably regular as one would expect, I know he is focussed on ensuring that customer satisfaction is high and that people are happy with the level of service provided. There is a growing level of responsibility on Revenue, so staff pressures come into play as well, but we have been able to assist in that regard in recent times. The Chairman is not averse to trying to see what other improvements could be introduced in addition to what is already being done. In fairness, initiatives as reflected in the Finance Bill confirm there is a co-operative approach from Revenue in trying to assist in terms of consumer satisfaction.
On behalf of the Labour Party, I have proposed the creation of a taxpayers' advocate. Notwithstanding the improvements which the Opposition has forced on the Revenue Commissioners in recent years to be more accountable to hard-working taxpayers, progress has been slow. It is a well established fact that every year some €200 million in tax refunds and rebates go uncollected by people in the PAYE sector and other taxpayers. Perhaps the Minister could update us with the figures. Recently, the Minister introduced a restriction of four years on ordinary PAYE taxpayers reclaiming rebates and refunds that may be due to them. Health expenses refunds are particularly bad in this regard. Young people may have influenza at this time of year and need to visit a doctor. They may not need to do so again until next November or December. They do not keep receipts, yet they are entitled to a tax refund for the minimum €50 it costs to go to a doctor in Dublin.
The Minister is arrogant to suggest that what the Revenue Commissioners have done, as a result of continuous pressure by the Opposition, is fantastic. Over Christmas, the Revenue Commissioners featured at some length in the Moriarty report. That report revealed that the Minister's late leader, Mr. Charles Haughey, could pick up the phone for two or three millionaires who had tax problems or were anxious to have a discussion about tax issues and, hey presto, the Chairman himself would get in touch with the affected millionaires.
The Deputy should put a question.
Hard-working taxpayers earning €34,000 pay tax on overtime at 41%. Very often, they get no tax refunds on medical expenses. A taxpayers' advocate is required who would put pressure on the Revenue Commissioners to give small taxpayers, who are not earning vast sums, their fair share. How many people get their refunds for bin charges? The estimate by the Institute of Taxation is up to 50%.
The Deputy should put a question.
Will the Minister give us his estimate? If 50% of people do not get their tax refund on bin charges, the Minister should give us his figures and tell us how good is the system.
Let us be clear about it, the responsibility for claiming credits lies with individual taxpayers. The Revenue Commissioners are making every effort to ensure people are aware of their rights so they can claim them.
It is not good enough.
The only arrogance that ever arises in this House at question time is when someone disagrees with the Deputy, so she calls them arrogant.
I represent taxpayers.
So do I.
I do not represent millionaires, but the Minister does.
Question No. 110.
My party represents far more working people than the Deputy's and that is why we have 81 seats.
The Minister should read the Moriarty report to see what the commissioner did for Mr. Haughey.
If the Deputy looks at the Moriarty recommendations in that respect she would be more accurate in her comments. The Deputy has a blinkered view.
House Prices.
Paul Kehoe
Question:110 Mr. Kehoe asked the Minister for Finance if he has assessed the affordability of house purchase for young families in view of the 40% increase in the cost of mortgages in the past 12 months and its implications for Government policy. [4146/07]
As the Deputy will be aware, housing policy is primarily a matter for the Minister for the Environment, Heritage and Local Government. From an economic perspective, house buyers benefit from a range of supporting factors, including healthy income growth, low income tax rates and relatively low levels of interest rates by historical standards. Affordability is also supported by the strength of the economy, record employment levels and relatively high savings rates. Recent indicators point to continued moderation in house price inflation in line with increased housing supply and higher European Central Bank interest rates.
The consensus among commentators is for this trend to continue, resulting in a gradual cooling and soft landing for property prices in Ireland. The Central Bank's financial stability report 2006 shares the view that this is the most likely outcome, while noting that increases both in house prices and interest rates are contributing to reduced house price affordability. House prices rose at a markedly reduced rate of only 0.1% in December 2006 and, according to economic commentators, this signalled the beginning of a slowdown and expected soft landing in the property market.
The Finance Bill 2007 confirms measures I announced on budget day, which will help to sustain economic growth and improve both take home pay and affordability of housing. These measures include a doubling of the ceiling for mortgage interest relief for first-time buyers as well as increases in relief for those other than first-time buyers.
Significant support is being provided for investment in social and affordable housing under the National Development Plan 2007-13. The housing programme in the NDP will total some €21.2 billion over the period of the plan. This represents a substantial increase over the investment level of €9.1 billion in the NDP for 2000-06. It represents an average investment of over €3 billion for each year of the plan.
The Minister may think the property market will have a soft landing, but there is certainly no soft landing for first-time buyers. Is the Minister aware that the figures for the housing market show the percentage of houses bought by first-time buyers has declined rapidly, from over a half in 2004 to less than one third now? This clearly indicates first-time buyers are being squeezed out of the new house market, as they have already been squeezed out of the second-hand market.
The Minister adverted to the national development plan and social and affordable housing. Does he accept the Government has delivered just 45% of its own target for social and affordable housing? More than twice as much social and affordable housing would have been delivered to young families if the Government had met its targets. How does he square this with the complacency that seems to exist in Government circles? A body like the Central Bank, which is hardly a hotbed of social policy, tells us that half of young families cannot afford to buy a house, a figure that will increase to 60% if changes are not made.
The Government must get real with regard to first-time buyers and begin to deliver realistic opportunities for them to have affordable homes in places where they can have a sustainable lifestyle.
The Government's housing policy will tackle issues of affordability through supply side actions. Maintaining the pace of housing supply in line with our future demographic requirements is a primary objective of Government policy——
The policy is collapsing. The targets are not being delivered.
——which has a critical role to play in securing balance in the marketplace and supporting affordability, particularly for first-time buyers.
The Department of the Environment, Heritage and Local Government's housing policy framework outlines Government plans to reform the social and affordable housing sectors and support the expansion of home ownership. We are working towards building sustainable communities through a capital investment programme of €4 billion over the next three years. Some €17 billion will be invested in social housing with the aim of delivering a greater quantity of social housing options and improving the overall quality of the tenure. Some 27,000 new homes for people in need of social housing will be commenced or acquired over the period 2007 to 2009 and it is estimated that over 60,000 new social housing units will be provided over the full period of the national development plan.
The Affordable Homes Partnership, established in 2005 for the greater Dublin area, will build on its growing experience to assist in the roll-out nationally of certain initiatives. Investment of €4 billion under the plan will provide support for people seeking accommodation in the owner-occupied sector through the provision of affordable housing. It will also assist in the upgrading of the physical conditions of certain categories of private housing with particular emphasis on those who are most in need, including people with disabilities and older people. Some 17,000 new affordable units will be delivered over the period 2007 to 2009. The financial framework reflected in the plan will allow for broadly similar levels of output beyond 2009, resulting in some 40,000 households benefiting from affordable housing over the period of the plan.
That is all bluff and bluster. The Minister should consider the hard figures. The Government committed to producing almost 7,000 social housing units and 4,000 affordable housing units, but it has achieved less than half of that target. All this talk about what will happen in the years 2007 to 2013 does not butter the parsnips for people who are waiting for housing but find that, as the Central Bank has told us, half of them cannot afford it and that they are being squeezed out of the first-time buyer new housing market as they are replaced by investors, which has been demonstrated.
That is the reality on the ground. There is no point going to the word processor and reading out scripts which are delivered to the Minister's desk by I know not whom. The Minister should take a look at the reality around him. Perhaps the situation is different in Offaly from that in Dublin but this is the reality for people in Dublin. They cannot afford housing and the promise of affordable housing is not being delivered.
It would be better if some of the local authorities in the greater Dublin area which are populated with majorities from the Deputy's party were more supportive of housing development than is the case. I can point to a few who have been less than helpful in making sure we maximise housing development prospects within their local authority areas. That is an issue about which the Deputy has done nothing.
The Government collapsed its own policy of 20% for social and affordable housing. It has not pursued its own policy.
The Deputy should get his house in order and support construction. I have to listen to Deputy Burton constantly talking about builders. At the same time, the Deputies do not want houses.
The Minister is in Government. He can start lecturing when he is——-
Order, please. I will take a brief supplementary question from Deputy Burton.
Does the Minister realise there are families with two children in my constituency who are living in one-bedroom so-called affordable apartments? They cannot trade up because they do not have enough income, even though they are working in high-tech companies. For a single income family, the penalty in extra tax is almost €5,000 per year on their after-tax income. They would be better off on the dole as a family in Dublin West would get €1,200 to €1,400 from the community welfare officer. What has the Minister to say to these families? What does he consider "affordable"? Is €320,000, which is what the Affordable Homes Partnership is offering for a starter house in Dublin West, an affordable price if the family is on one income? The Minister should get real.
We must move on.
I reiterate that the people who need to get real are those in local authorities populated by the Deputies' parties, who are doing everything they can to stop housing developments in the greater Dublin area.
It is those in the Minister's party who own all the land. It is the seven developers who own all the land.
They succumb to the NIMBY factor. They are doing nothing about affordable housing. The Deputy should ask Deputy Gilmore what he is doing in his local authority area. He talks about local housing in this House when his party has a majority on that local authority, which is a disgrace for the amount of housing it provides.
The Minister should talk to his developers in the tent.
We must move to the next item.
On a point of order, the Minister is an inhabitant of the tent at the Galway races where the developers who own the bulk of land in my constituency hang out with him.
That is all cant. The Deputy is full of cant.
We have moved on.
The Deputy is politically paranoid. That is her problem. The Labour Party should not talk to me about housing.
Tell that to the people of Dublin West.
The Labour Party talking about housing is a joke.
The affordable houses are a joke.
The Labour Party should get their local authorities in order.
Our local authority is the best in the country. The Minister is never done praising Fingal County Council.
The Deputy is a joke.
Written Answers follow Adjournment Debate.