I move amendment No. 1:
In page 11, between lines 11 and 12, to insert the following:
TAXPAYERS' ADVOCATE OFFICE
1.—The Ombudsman shall include in her annual report a special report on the overpayment of tax by PAYE taxpayers, and on the take up of credits by such taxpayers, and the branch of her office dedicated to ensuring that the take up of credits is readily available to all taxpayers, and refunds made as rapidly as possible where this arises, as well as ensuring the availability of a ready mechanism for informing taxpayers (particularly pensioners) who are entitled to a refund of DIRT tax, shall be known as the taxpayers' advocate office.".
The purpose of this amendment is to again ask the Minister for Finance to set up a taxpayers' advocate. That would be an independent unit within the Office of the Ombudsman, to ensure that as far as possible PAYE taxpayers get all their entitlements, in particular the tax refunds due to them for medical expenses, service charges and refuse charges, trade union subscriptions etc. We have debated this matter before with the Tánaiste and it has provoked quite clear action on the part of the Revenue Commissioners to considerably beef up their contact mechanisms, advise taxpayers of their entitlements and encourage them to claim. However, the system has an enormously long way to go. The Minister knows this, as do the Revenue Commissioners. We want an advocate to advise the Revenue Commissioners to the effect that although what they are doing is an improvement, they could do better.
Young people, in particular, are paying a good deal in rent or management charges, where they have bought an apartment in which service charges for bin and refuse collections are frequently wrapped up. Almost none of those people can get a tax break because this Government has no legislation on management companies. The management fee includes the refuse charges, but the Revenue Commissioners cannot provide a mechanism to claim for that because in most cases these management companies do not provide itemised accounts. Through no fault of their own — and limited blame for the Revenue Commissioners — it is impossible for people to collect the tax breaks that are due to them in this case.
The sums involved are not trifling. The average rent for a two-bedroom apartment or house in Dublin west, which is not the dearest of areas, is a minimum of €1,200 a month. In some areas where there is shortage of demand, it could be €1,500 or €1,600 a month. The tax rebate for rental expenditure is really important, and significant for people on a tight budget. Similarly, refuse charges in most areas are climbing above the €250 and €300 mark. For people such as the Minister, who is accustomed to providing tax breaks for the very wealthy, the notion of 20% on €300 may seem to be something of a joke, but it all adds up. Cumulatively, the Revenue withholds every year hundreds of millions from individuals who ought to be entitled to tax breaks.
The purpose of this amendment is to set up an ombudsman structure. This has been debated and even adopted in principle by organisations such as the Institute of Taxation. Whenever the Commission on Taxation reports, this initiative will be a recommendation of all those hard working tax advisers the Minister has loaded onto that body. As I said, even the Institute of Taxation has said that this is a decent proposal. It is pro the taxpayer, whether big or small. It is not really an issue for very wealthy taxpayers because, by and large, they can afford lawyers and accountants to do their returns and minimise their tax payments, as they are legally entitled to, under our system.
Effectively, there is a range of very modest tax refunds in our system, for ordinary people on relatively low incomes. We have a defined system of tax breaks for wealthy individuals. These wealthy individuals can afford the accountants. Most ordinary people cannot employ an accountant. I will revisit the example I gave the Minister and ask him to think about it. Someone on the average industrial wage of just over €35,000, married with two children, is very unlikely at the moment, in terms of the Government's policy, to qualify for a medical card. If a member of that family of four, as can happen frequently, has a bout of illness necessitating a number of visits to a GP, the standard fee on the north side of Dublin is €55. It is very easy for such a family without a medical card experiencing normal childhood illnesses and perhaps a bout of 'flu in the course of a year, to run up medical costs of between €400 and €700. The figure will obviously be much higher if somebody is more seriously ill or has a more protracted illness. However, just taking the ordinary household where children get sick, the breadwinner is entitled to a tax rebate at the standard rate.
Wealthy taxpayers can, and do, claim back their medical expenses. Their advisers put in for a rebate on every cent they are owed. That is what they are paid for, but when it comes to the ordinary taxpayer, he or she cannot do it. It is wrong that it has taken so long to make provision for medical expenses to qualify for a tax rebate at source. That is done for mortgages and it could be done for medical fees. However, there is no onus on the Revenue Commissioners to change the system because there is no independent watchdog telling them they could do better. The Revenue Commissioners are to be praised for what they have achieved in terms of text information, the use of friendly lines, e-mail usage and so on; these are all positive developments. However, the take-up on relatively small tax refunds, say, €20 to €200 typically for an average person, is very small. Essentially this means that every year the State holds on to €200 million, which would otherwise be refunded to individual taxpayers.
Yesterday's returns show we dropped €0.5 billion on taxes in the first two months of the year, so I can understand that perhaps there is a motive on the part of the Minister for Finance to hold onto the money, rather than give it back to the taxpayers. We might need that little nest egg of unclaimed tax rebates. Nonetheless, I strongly urge the Minister that if we want to change the compliance attitudes in this society, then if people on lower incomes are due to get some tax back, this should be made as easy as possible for them. If large amounts of unclaimed tax rebates remain in the State coffers, then the Government should address the issue. Other countries do it, by having a taxpayers' advocate office, as it is called in the United States. This office could be located in the Office of the Ombudsman, and so would be an extension of that role. As with the Ombudsman over the years addressing particular issues, where individual citizens have got less than their due, it is to be recommended in terms of the type of governance by consent we all want to see in this country.
Tax is a difficult technical area for most people. It is hard for young construction workers, for example, who until recently were making a fair bit of money to remember that at the beginning of the year they might have visited the doctor. They might hold a couple of receipts for €100 and perhaps could get a tax rebate in that regard.
The office of the advocate, in the event, could constantly challenge the Revenue Commissioners to do more to get the rebates legally owed to taxpayers paid to them.