Richard Bruton
Ceist:68 Mr. R. Bruton asked the Minister for Finance the action he proposes to take to ensure the outstanding recommendations in the Ombudsman Report to Dáil Éireann of 6 November 2002 are implemented. [21508/02]
Priority Questions. - Tax Rebates.
I gave my initial response to this report in a statement I issued on 6 November. I also wrote to the Ombudsman on 6 November indicating that I would study his report carefully. As the Deputy is aware the Revenue Commissioners have indicated that they were unable to implement certain recommendations of the Ombudsman's report on the basis that they do not have the statutory authority in these cases to pay interest in respect of tax repaid.
My Department, in conjunction with the Office of the Revenue Commissioners, is examining the contents of the report. The general issues raised by the Ombudsman are already being actively examined.
I sympathise with the individuals concerned, but as I indicated in my initial response to the Ombudsman's special report, any solution has to be on a general basis taking into account all the issues, including the amount of revenue involved. In this regard, the House might be interested to note that the Revenue Commissioners pay out billions of euro in tax rebates each year. Consequently, the Exchequer implications of a general interest scheme must also be weighed. The parameters of any statutory scheme, which may be considered to address the repayments issues, will need to be thoroughly and carefully examined. As with all legislative changes, such a scheme, if introduced, would apply prospectively. I will con sider the result of this examination in the context of the Finance Bill.
I thank the Minister for his reply. Does he agree the rejection of three of the Ombudsman's five recommendations amounts to such a misrepresentation as to be a direct and unprecedented challenge to the authority of the Ombudsman, as he indicated in his report?
Does the Minister agree it is grossly unjust for people who are late with tax payments to face an interest penalty of 1% per month? The Revenue is saying – the Minister is not saying to the contrary – that compliant taxpayers who have overpaid should lose in real terms because of their overpayment. To quote the High Court, does the Minister not accept the doctrine of unjust enrichment should apply in this case and a refund of interest should be given?
Does the Minister agree it is damaging to the Revenue Commissioners to be seen to oppress in this way compliant taxpayers and particularly two widows who are in difficult financial circumstances? Was it not open to the Minister and his advisers, acting with the Revenue Commissioners, to come up with a solution before this report was placed before the Houses of the Oireachtas?
The Ombudsman made five separate recommendations. The Revenue is implementing two of them. The Revenue says it is not in a position to act on the other three because of its statutory powers. The Ombudsman does not agree with that assertion. I accept the issues raised by the Ombudsman need to be addressed, but the Revenue Commissioners did not lightly reject the recommendations. They had no legal basis to make the payments recommended by the Ombudsman.
In reply to the Deputy's second question, interest is repaid to certain categories of taxpayers, normally those under schedule D on which an assessment has been raised. In that case a person who overpays tax is entitled to a refund of tax with interest. That is based on the days when estimates were made for all types of self-assessed tax. People make preliminary payments on account and the exact charge may not be known until later. However, the Revenue Commissioners do not generally charge interest on an underpayment by PAYE taxpayers. They charge such interest only when making an assessment regarding the underpayment of PAYE, which does not happen often.
There are wide-ranging implications to making further changes in this area. I note what the Ombudsman has said and we will consider all these matters in the lead up to next year's Finance Bill. This is a difficult area to address and there are different legal opinions involved. The Revenue Commissioners seem to have their legal opinion. I am sure the Ombudsman has his legal opinion. Lawyers enrich themselves every day in the courts of Ireland due to differences of legal opinion. However, as stated in my reply, billions of euro are repaid every year by the Revenue Commissioners. We will have to judge whether it would be an efficient use of resources in the light of constrained public finances to introduce a statutory interest scheme here. This could raise all sorts of problems and I will consider all these matters in the run-up to next year's Finance Bill.
Does the Minister not agree that to deny justice and fair treatment to all taxpayers on an equal basis cannot be the appalling vista the Minister suggests? This is a question of justice. The Minister makes precisely the same point as the Ombudsman. The Revenue gives refunds with interest to certain people but denies it to the most deserving cases. Where is the equity in that? Does the Minister agree Revenue has a duty of care not to extract from any taxpayer more than is due? That means when people overpay, they must be recompensed in full and in real terms so they do not lose out. The principle here is one of justice. Will the Minister consider approving this?
I will consider the matters the Deputy raised before next year's Finance Bill.