I thank the Chairman. I am pleased to have the opportunity to appear before the Oireachtas Select Committee on Finance, Public Expenditure and Reform, and Taoiseach, in connection with the 2020 Estimates for the Department of Finance, Vote 7, and for the other Votes within the finance group: the Office of the Comptroller and Auditor General, Vote 8, the Office of the Revenue Commissioners, Vote 9, and the Tax Appeals Commission, Vote 10.
I thank the committee and its officials for arranging this meeting at short notice last week, and I also thank the committee for its understanding with respect to the delay in sharing the briefing material, which I believe only went out yesterday evening.
I will focus on the Department of Finance first. The Department is structured around two directorates - the economic and fiscal directorate, programme A; and the finance and banking directorate, programme B. There are also a number of support divisions that ensure the smooth operation of the Department. In order to provide an accurate cost of the two programmes A and B from a management reporting and oversight basis, the costs of these support divisions are allocated on a 50:50 basis to each of the two programmes.
The net funding allocation sought for the finance group of Votes for 2020 totals €460.9 million, which compares to a 2019 group Vote of €440.2 million. This represents an increase of €20.6 million or 4.7%. The primary driver of this increase is the provision of a €21.3 million increase for the Office of the Revenue Commissioners relating to increasing staff numbers and other staff costs, which I will address later.
Under Vote 7, the gross allocation to the Department of Finance in 2020 is €39.8 million, of which €10.5 million is provided for a fuel grant scheme for disabled drivers and a further €768,000 is to fund the office of the Financial Services and Pensions Ombudsman. Leaving these aside, the Department’s allocation provides for the administrative and non-administrative costs of the Department. The vast majority of this, some €20.6 million or 72%, is provided to cover salaries and allowances, with a further €4.9 million, or 17.4%, to cover facilities and non-pay administrative costs. The remaining €3 million, or approximately 10%, is provided to cover the legal, advisory and committee costs necessary to support the Department in the proactive delivery of its remit.
Vote 8, which is the allocation to the Office of the Comptroller and Auditor General, is applied towards a single audit and reporting programme. The Comptroller and Auditor General is an independent constitutional officer whose mission is to provide independent assurance that public funds and resources are used in accordance with the law, managed to good effect and properly accounted for, and to contribute to improvement in public administration. The Comptroller and Auditor General is required by law to issue opinions on the accounts of Departments and public bodies that are audited by him, which was completed last week in respect of the 2019 financial year; publish reports on important matters at his discretion relating to value for money and the administration of public funds; and authorise under the comptroller function the release of public money from the Exchequer for purposes specified by law. The office assists the Comptroller and Auditor General in his statutory functions and is staffed by civil servants.
The Comptroller and Auditor General’s financial audit role covers approximately 290 sets of accounts produced by public bodies. Together, these bodies have financial transactions totalling more than €200 billion of public money each year. The allocation for this Vote in 2020 is €9.116 million. Given that it was €8.657 million last year, this represents an increase of approximately 5.3%.
Turning to Vote 9, the Office of the Revenue Commissioners, which is the Irish tax and customs administration, plays a vital role in our economy by collecting taxes and duties due to the State. For 2020, Revenue requested a net budget allocation of €403.975 million, which was an increase of €21.29 million, or 6%, on the 2019 Estimate. Nearly three quarters of the budget is related to payroll for an increased employment ceiling of 6,714 staff. In this regard, an additional €18 million was allocated to Revenue in the 2020 Estimates to cover Brexit funding requirements. That allocation related to the full-year cost of an additional 330 staff to manage the implications arising from Brexit and for additional Brexit-related infrastructural and operational requirements, for example, vehicles and detection equipment. This outlay is required to facilitate import and export traders and to implement the customs controls and checks that will be required following the UK’s withdrawal from the EU.
The 2020 allocation also provided for some €2 million in order to move dividend withholding tax to a real-time platform as part of Revenue’s ongoing programme of developing online business solutions for taxpayers. However, this funding was instead used to provide for the speedy development of the wage subsidy schemes that were rolled out by Revenue as part of the Government’s economic supports to Irish businesses and their employees during the Covid-19 emergency restrictions. Some of that funding also helped to develop the stay-and-spend scheme. Taking account of a reduction in capital and appropriations-in-aid, the balance of €5.9 million provided to Revenue in 2020 is in respect of the restoration of pay under the public service stability agreement.
It is worth noting that, along with most sectors of the economy, Covid-19 has significantly impacted on Revenue’s operations during 2020. Revenue has responded by quickly putting in place a range of measures in addition to the wage subsidy schemes. For example, it has implemented special measures to support businesses by deferring or warehousing VAT or PAYE debts resulting from the impact of Covid-19 on businesses. Revenue is also continuing to support the delivery of other essential public services to combat the pandemic, including contact tracing for the Department of Health and the HSE and processing applications for income support payments for people affected by Covid-19 for the Department of Employment Affairs and Social Protection. These economic support measures have been implemented by Revenue without incurring additional costs to the Exchequer.
As we approach 2021, Revenue will continue to prepare for, and manage, the impact of the UK’s withdrawal from the EU.
Revenue will implement customs controls in a manner that encourages legitimate trade, enhances competitiveness and supports business while managing compliance risks.
The 2020 budget allocation for Vote 10, the Tax Appeals Commission, TAC, is €3.233 million, a slight increase of €25,000, or 1%, on the 2019 Estimate. The 2020 Estimate is to provide for the TAC to further advance its programme of modernisation and reform and to address its caseload in an efficient and effective manner, while also meeting its obligations and accountability as an independent body, under the aegis of the Department of Finance. The Estimate for this year provided for the establishment of a new role of chairperson of the TAC in 2020. I am pleased to say that Ms Marie-Claire Maney has been appointed as the chairperson of the TAC with effect from 1 July 2020. The 2020 Estimate also provided for further appointments at various administrative grades to bring the staff complement to 33, as per the recommendations of the independent review of the operation and workload of the TAC. I am confident that the Estimate provides for the increased staffing and supports that the TAC needs to make progress on clearing the backlog of appeals. This year there has already been a significant increase in the number of determinations issued by the TAC.
I thank the Members for their attention and commend the 2020 Estimates for the finance group of Votes to the committee.