Dáil Éireann Debate, Wednesday - 23 June 2004
56 Mr. J. Bruton asked the Minister for Finance the action he has taken on the views expressed by the Comptroller and Auditor General in his 2003 report on his Department’s failure to calculate the cost of many tax incentive schemes and tax expenditure. [18559/04]
View answerAs the Deputy may be aware, in general it is the Office of the Revenue Commissioners which is the main source of information, statistics and data on tax incentives and expenditures. However, Revenue's primary function is founded on the administration of the tax system and the collection of tax. The collection of statistical information flows from that primary function. The trend to simplify returns made by taxpayers has meant that some tax reliefs are returned in aggregate form. The result is that total costs of the individual reliefs concerned cannot always be readily identified. For example, capital allowances are treated in this way. On the other hand, where information in relation to individual reliefs is provided separately on the tax returns form, it can be captured electronically and may be examined centrally by Revenue. An example of this is the data relating to the artists' exemption where virtually all the information relating to numbers of claimants and the amounts exempted from tax can be obtained.
I am of the view that it is important that data be improved to facilitate assessments of such expenditures and reliefs. In this context, my Department has been working closely with the Revenue Commissioners to investigate information and data capture issues arising with a view to producing possible solutions. I am also conscious that capturing additional information on tax return forms must be considered in the context of not over-burdening compliant taxpayers. On foot of this work, the Revenue Commissioners will be introducing a number of changes to the forms relating to the annual return of income in respect of the tax year 2004 and to the P35 form, which is returned to Revenue at year's end with totals for earnings and deductions for each employee, in respect of the tax year 2005. These changes will yield additional information regarding the cost of various tax reliefs and relief in relation to pensions.
I included provisions in Finance Act 2004 to underpin these changes. In addition, the use of the Revenue on-line system, ROS, has been increasing and will continue to be encouraged. Returns filed using ROS can more readily accommodate information data capture. Some changes have already been made in this area. As the Deputy will be aware, I stipulated in the Finance Act 2003 that returns of income must henceforth be made for stallion stud fees and commercially managed woodlands. I do not believe that each and every relief needs to be captured as some of them are on such a small scale that the cost involved would not be commensurate with the value of the information sought. An example is the relief for thalidomide victims or HIV groups. Equally, the manner of capturing information on tax reliefs is not limited to examining return forms. For example, there is no need to seek information on tax returns in relation to the tax exemption for child benefit as the cost involved can readily be estimated from other available data.
Detailed reviews of the costs and benefits of various tax reliefs are carried out from time to time. Examples of this are the reviews carried out on tax reliefs for urban renewal, films and the business expansion scheme.
