Vol. 440 No. 7
1 Mr. J. Bruton asked the Taoiseach the estimate, if any, the Central Statistics Office has made of the size of the black economy in Ireland in view of reports that the inland revenue in the United Kingdom and the Institute of Fiscal Studies estimate that the black economy is worth between 6 per cent and 8 per cent of gross domestic product in the United Kingdom; and if he will make a statement on the matter.
While the Central Statistics Office (CSO) does not estimate the overall size of the black economy in Ireland, it does endeavour to ensure that any incomes earned in the black economy are captured in the gross domestic product. When necessary, the basic data on incomes are adjusted upwards to incorporate estimates for hidden economic activity. An example is the adjustment made for non-reporting and under-recording of incomes by self-employed traders where the basic data on incomes are derived from the tax collection system. These incomes are grossed using factors calculated by comparing the numbers of self-employed recorded in the census of population and labour force surveys with the numbers making tax returns. This and the other quantifiable adjustments made to the national accounts for black economy activity amount to about three and a half per cent of GDP at present.
Income earned from black economy activities is also indirectly captured in other components of the GDP but the amounts involved cannot be separated and quantified. For instance, the labour supply approach used to estimate wages and salaries will capture earnings not reported to the tax authorities but the estimation procedures do not separately distinguish these amounts. Also, income from agriculture is measured indirectly using the so-called output approach and is not dependent on the tax declarations of farmers.
The CSO will continue its efforts to improve the coverage of the black economy in the Irish National Accounts although such activity, is of its very nature, difficult to estimate.
How often are such estimates done? Does the evidence available to the Minister show whether the size of the black economy as a proportion of the total economy has increased or decreased over time?
Other estimates have been given, the most recent being an unofficial one last October by Mr. Gabriel Fagan which put it as high as 7 or 8 per cent. However, the estimates are done on an ongoing basis by the CSO which tries to keep track continuously.
The Minister will agree that the estimates of 3.5 per cent was arrived at taking certain factors into account that would not have been taken into account in Mr. Fagan's estimate. I am asking if that estimate of 3.5 per cent, taken on the same basis as previous estimates, shows an increase or a decrease in the black economy as a proportion of the total economy.
The previous estimate is the only one on which I have information, and the percentage is almost the same.
Was the Minister of State able to draw any conclusions from the returns from the tax amnesty as to the extent of the black economy? The Government used the black economy to justify the introduction of the amnesty which would catch people not paying their fair share of taxes.
This is essentially a statistical question. Matters of policy may not, therefore, arise. Policy matters will require further questions.
I am not disputing policy, I am asking the Minister if he is able to draw any statistical conclusions from the returns from the amnesty——
The amnesty does not come into this.
May I hear the Minister of State? We are talking about the black economy and its extent.
I am concerned with the question which is purely statistical.
Is the Minister of State able to draw any conclusions from the returns from the tax amnesty?
I have ruled the Deputy out of order on that matter.
With respect, I think you are wrong.
The Minister has agreed on the size of this problem as outlined in the paper prepared by Mr. Gabriel Fagan. He has agreed that it relates particularly to tax evasion.
Deputy Rabbitte heard me earlier. This is purely a statistical question. Matters of policy require further tabling of questions.
The Chair should wait until he hears the questions.
I did indeed hear you, and I am in accord with your ruling. Does the Minister think it would diminish the size of the black economy if the antievasion measures in existence were more effective — he is conscious of the recent criticism of the tax official's union——
The Deputy is clearly entering into the area of policy. I cannot allow that.
The Chair is embarrassing the Minister. Is it not possible to ask a brief question?
I will call the Deputy provided he asks a relevant question.
I will do so. From the Minister of State's figures, can he say what proportion of the black economy was generated from those officially unemployed and those who are working but not declaring some of the work they are doing? Does the Minister have those figures?
The Deputy should puruse that matter in the usual way.
I wanted to find out——
I am proceeding to Question No. 2.
