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Black Economy Issues

Dáil Éireann Debate, Tuesday - 11 June 2013

Tuesday, 11 June 2013

Questions (140)

Simon Harris

Question:

140. Deputy Simon Harris asked the Minister for Finance the measures in place to address the black economy; the consequences for involvement from procurement to purchase; and if he will make a statement on the matter. [28014/13]

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Written answers

I am informed by the Revenue Commissioners that they are very mindful of the unfair competitive advantage to be gained by those businesses that do not fulfil their tax obligations. Their audit and tax compliance programmes are under constant review to ensure that they are focused on the areas of greatest risk, including risks from a possible upsurge in the shadow economy, particularly in times of recession.

Tackling shadow economy activity is an on-going corporate priority for Revenue and a number of national and regional projects are in progress. Measures undertaken by Revenue include: a prioritised focus on those sectors that traditionally have been susceptible to shadow activity specifically cash business, such as the hospitality sector, including bars, nightclubs, fast-food/restaurants and entertainment, and white collar cash, such as doctors, dentists, solicitors, accountants, engineers etc; a focus on other sectors including the construction and rental sectors, and streetscape activities including covert surveillance, cold calls to businesses and venues often on a joint or multi-agency basis with the Department of Social Protection (DSP) and the National Employment Rights Agency (NERA); specifically, in relation Revenue compliance activity on the shadow economy in the sectors set out above, a total of 2,804 audits and 31,638 other interventions were completed in 2012 yielding in excess of €104m. and close consultation and co-operation with the Department of Social Protection. The primary objective of these activities is to uncover either non-declaration or under declaration of income and/or fraudulent DSP claims. A High Level Steering Group with representatives from both Revenue and the Department of Social Protection meet regularly and oversee information exchanges and other areas of co-operation between the departments; multi-agency construction site visits (Revenue, DSP and NERA) are now a feature and the site information provided by the Department of Education and Skills at procurement stage, on their capital expenditure on new and extended school premises, facilitates multi-agency site visits throughout the projects to ensure full compliance with all appropriate legislation and regulation; and Revenue chairs the Hidden Economy Monitoring Group (HEMG) that provides a forum for the exchange of views on the effectiveness of measures introduced in combating the hidden economy. This group includes representatives from employer and business organisations, trade unions and other Government Departments and agencies. Regional hidden economy liaison groups have been established to facilitate greater local interaction and more immediate responses to insights and issues that may be highlighted.

Aside from the HEMG, Revenue meets regularly with other representative bodies that have concerns over shadow economy activities in their particular sectors. A comprehensive package of measures has been introduced in relation to Excise (Oils) including, requirement for separate licences for auto-fuel traders and marked fuel traders, requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place. A new return form was introduced for the oil industry providing detailed information on oil movements, thereby facilitating supply chain analysis. Data from the initial monthly returns are currently being examined and plans to optimise the use of the data are in progress. In 2012, there were 86 illicit mineral oil and 11 oil laundries seizures resulting in the recovery of a total of 1.1m litres of illicit oil.

Revenue’s tobacco strategy, “Strategy On Combating the Illicit Tobacco Trade (2011- 2013)”, was published on the Revenue website in June 2011. This three-year strategy is underpinned by annual action plans. During 2012 Revenue’s Customs Service seized a total of 95.6m cigarettes in 8,108 seizures and 5,277kg of tobacco in 1,395 seizures. Revenue regularly proposes legislative measures aimed at curbing shadow activities. Two recent examples are, firstly, the introduction of on-the spot fines for employers who breach the PAYE Regulations was introduced in 2011 and a comprehensive revamp of the Relevant Contracts Tax system was implemented in 2012. On the tax collection side, as the Deputy will be aware, Revenue takes action to enforce debt recovery in appropriate cases, including through the use of Sheriff or solicitor enforcement and liquidation of companies. These interventions have a very strong level playing field dimension.

In relation to procurement issues, where the value of a State contract is greater than €10,000, there are procedures in place under Department of Finance Circular 43/2006 that require the successful tenderer to produce a valid Tax Clearance Certificate. All other payments in excess of €1,000 made by State bodies must also be reported to Revenue annually.

On the purchasing side, I presume that the Deputy is referring to consumer protection which is a matter for my colleague the Minister for Jobs, Enterprise and Innovation. However, the Revenue Commissioners regularly advise consumers of the dangers involved in the purchase and consumption of illegal and counterfeit goods, and the use of laundered diesel for example.

I am satisfied that the Revenue Commissioners commit significant resources annually to tackling the shadow economy and take the matter very seriously. I am also satisfied that the approach being taken by the Commissioners consisting of high-profile and multiple interventions in the riskiest sectors, in addition to regular dialogue with the legitimate trade and other Government agencies, has been effective in minimising the impact on the Exchequer.

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