I move amendment No. 25:
In page 27, between lines 24 and 25, to insert the following:
"14. The Minister for Finance is to order a study to be carried out on the operation of Relevant Contracts Tax, particularly in relation to rise in self-employment in the construction industry, and is to report to the Dáil within six months of the enactment of this Act on the findings of the study.".
I have raised this issue with the Minister on many occasions. It concerns what I and, more importantly, many working in the construction sector believe to be rampant abuse of the category of self-employment, particularly in the construction sector, to wrongly categorise workers as self-employed when they are in fact being employed by the main building contractors. These contractors are wrongly categorising workers they take on as self-employed in order to avoid paying tax, proper wages, sick pay and holiday pay and to get employees on the cheap. That allegation would be backed up by the sort of advertising made by recruitment agencies. I may have quoted from one I have with me previously but it gives a flavour of the sort of thing that is going on where recruitment agencies recruiting people in construction are setting out in clear and black-and-white terms how people who work through them can avoid paying proper tax for their employees. An advertisement from one recruitment agency advertises the fact that if a company works through the agency, the company will not have to pay PRSI, holiday pay, pensions, sick leave, redundancy payments or administration costs of payroll, PAYE or PRSI. In addition, the advertisement states that the company will not have to pay recruitment or advertising costs, there will be no dispute with employees or unfair dismissal actions and the company will have the ability to hire and fire staff at one hour's notice throughout the country. The agency says that it can provide labour and staff during busy periods of the year when companies have shortfalls and the company can then get rid of them at an hour's notice. The advertisement goes on to explain how the biggest advantage is cash flow and that paying staff on a weekly basis and PAYE and PRSI on a monthly basis can put a strain on a company's cash flow. With this agency, companies do not have to worry about any of these aspects.
This happening on a huge scale. There is flagrant abuse of the tax system in order to avoid paying tax for the benefit of employers, particularly big employers in the construction industry. We had to do a bit of work to get the figures out of the Department because we got different figures on how many people are categorised in the relevant contracts tax, RCT, system. When I asked about how many there were, I was told the number was 35,000. We subsequently discovered that it was 75,000. When it is considered that there are approximately 130,000 or 135,000 people working in construction - the number is increasing - that means more than half of the people working in construction are apparently self-employed. That is nonsense. It is clear evidence of abuse.
If the amount of revenue that is not coming in from this tax head is considered, the figures are extraordinary. In 2008, the revenue coming in from RCT was minus €67 million. I do not know how many people were employed in construction at that stage.
I think it was about 90,000 or 100,000 and we got minus €67 million. In 2009 we got minus €53 million. It was a bit better in 2010 and 2011, but it was still minus €9 million and minus €6 million. The latest figures available to me are for 2014 where there is a positive figure, but it is derisory at €27 million even though at that point there were up to 110,000 or 120,000 working in construction - the figure is even higher now - with 60,000 or 70,000 people categorised as self-employed and we only get €27 million back in tax. The tax for the Exchequer from 75,000 PAYE workers would be multiples of that, but we are getting derisory figures and even, incredibly, minus figures for Revenue because whatever tax they pay they get back in offsets and repayments.
We know from the dispute involving JJ Rhatigan which caught the headlines - it was one of many disputes - that this sort of abuse was going on with one of the biggest contractors in the country, which was building a school for the State. That company was wrongly classifying bricklayers as being self-employed when they were nothing of the sort. They were not self-employed entrepreneurs, but people who had been taken on by the contractor as bricklayers only to discover five or six weeks into their employment that they were not getting paid anything. Then one of them got paid and when the money was divided up among the five employees, it worked out at about €5 an hour. They were forced to engage in a very long and bitter dispute to highlight the injustice being perpetrated against them. This was fraudulent behaviour by a major contractor, which is still getting contracts to build schools and other things for the State, in wrongly classifying these workers as self-employed when they were not, in order to avoid paying tax and proper wages. This stuff is rampant.
Anytime I raise this all I get back from the Minister is a request to report to the Department any individual instances of this of which I am aware. I actually did so on a few occasions. About a year ago I mentioned a particular construction site where, I had been informed, this was going on. When it was raided nine months later, I am informed they found precisely what we said they would find, which was people being wrongly classified as self-employed. That is just one workplace.
The evidence from the lack of tax revenue coming back and the fantastic and unbelievable numbers of people who are supposedly self-employed in the construction sector would suggest this is rampant. Yet the Government is unwilling to close down this abuse and ensure that workers who should be employed as PAYE workers are employed as PAYE workers, thus requiring their employers to pay all the proper pay and entitlements that an employer should pay for an employee.
Is the unwillingness by this and previous Governments to go after this because it means being able to get State contracts done on the cheap? Of course, if contractors can abuse workers and abuse the tax system in this way, they can put in bids that undercut contractors who actually pay their employees properly and employ them on proper terms and conditions. I think the State is deliberately turning a blind eye to this because it is a way of getting contracts done cheaply. Therefore the authorities do not really want to go after it; they might do the odd raid if prodded by a Member of this House. If ICTU or construction workers cry foul about it as they do on a regular basis, we might get some tokenistic action from Revenue, but then we just go back to ignoring it again and we let it happen.
The number of people working in construction is shooting up again. An article in The Sunday Business Post a few weeks ago noted that almost in direct proportion to the very significant increase in the numbers in construction, the number of people being classified as self-employed has shot up as well. As the construction sector expands, this abuse expands again, just as it had done during the Celtic tiger period when the construction sector was at its height and abuse was rampant.
That is my contention and more importantly it is the contention of building workers who have been campaigning, protesting and forced to take industrial action about this for many years. While Government Members often say, "You guys and people out there don't want to pay any tax", incredibly, we have a cohort of construction workers who go on strike and protest for the right to pay tax, but the State is not interested in vindicating their right to pay proper taxes. The workers want it because they know it means they are employed on proper pay and conditions and have the entitlements that employees should have.
The amendment seeks to insert into the Finance Bill a requirement to look at this area seriously and address the problem. It is in the interests of the State, the Exchequer and the wider public, not to mention in the interests of tens of thousands of construction workers who want the Minister to address this. It is a very reasonable amendment and if the Government cares about getting tax revenue in, cares about tax compliance and cares about the conditions of workers in the construction sector, it should agree to the amendment and go after the issue in a serious way to close down this wholesale abuse.