Vol. 559 No. 1
47 Ms Burton asked the Minister for Finance if he has satisfied himself that the figures for income distribution given in the recent Annual Statistical Bulletin of the Revenue Commissioners accurately reflect income levels, especially having regard to the relatively small number of persons declaring incomes in excess of ?100,000; and if he will make a statement on the matter. [25542/02]
Table IDS 1 of the Revenue Commissioners' statistical report for 2001 reports 22,471 income earners with gross incomes in excess of €100,000, about 1.4% of the total at all income levels. This number includes 14,609 self-employed income earners, including proprietary directors, representing 6.4% of the total in that sector. The figures in question are not indicative of the current position since they relate to income arising in the year ended 5 April 2000.
I am advised by the Revenue Commissioners that for the 2002 income tax year it is estimated that the total number of income earners on tax records with gross incomes above €100,000 is of the order of 53,600 or about 3% of the total. The number includes 31,500 self-employed earners, including proprietary directors, representing almost 10% of the total in that sector. The definition of gross income used does not include certain items. For example, it is net after the deduction of superannuation by employees and excludes income that does not have to be returned to the Revenue Commissioners for tax purposes such as child benefit.
Information on the incomes of PAYE earners is obtained by the Revenue Commissioners from end of year returns filed by employers and from individual taxpayer returns. Income information is provided by the self-employed in self-assessment tax returns. I am informed by the Revenue Commissioners that the credibility of incomes returned under the self-assessment system is a matter to which Revenue pays particular attention. An integral part of the self-assessment system is the audit programme under which taxpayers' returns and accounts are examined, either by way of desk audit or field audit, to ensure proper declaration of income and deductions. The great majority of cases selected for audit are selected on the basis of perceived defects in their tax returns and not on a random basis. This means that most cases are chosen for audit following a risk analysis which may suggest the possibility of incorrect returns for any of the taxes. Selection of cases on this basis has proved to be very successful. There is also a small random element which is regularly reviewed.
In 2001 Revenue completed more than 16,000 audits and investigations under the various audit and investigation programmes. These yielded €208 million. In general, the scope and extent of the compliance and audit programmes reflects Revenue's professional assessment from year to year of where tax is most at risk and where resources might therefore be devoted to best effect.
The Revenue Commissioners are continuing with their overall approach, on the one hand, to make procedures easier for those who are trying to meet their tax obligations and, on the other, to pursue people who do not pay on time or at all, using the various powers available to them.
The Minister in his reply stated that only 22,471 taxpayers reported gross incomes of more than €100,000, according to the Revenue Commissioners' statistical report for 2001. He also stated that the latest figure for this income category is 53,600. Does the Minister not find this figure to be truly astonishing for the years when the Celtic tiger was roaring away? In the same years, sales of top of the range Mercedes and other expensive cars averaged around 14,000.
Is it not true that one of the reasons for this low reported income by such a small number of taxpayers is the existence of a wide range of tax shelters, some of which the Minister is proposing to close at the end of 2004? The bulk of them, however, relate to small self-administered pension schemes, which are only useful to the very wealthy. Will the Minister indicate how much income is sheltered by wealthy people in such schemes?
As regards the income that is not declared in these returns, the Minister mentioned child benefit. Will he confirm whether income from stallion fees and nominations would also be included in these returns? Or, is it correct that the income from such fees does not have to be included in the returns of very wealthy individuals, even if it is tax exempt? The figures are truly astonishing and highlight the extent to which the Minister has allowed extraordinarily generous tax shelters—
A question only, please.
—to people on very high incomes, which are not similarly available to people on average incomes, particularly those in the PAYE sector.
I can send the Deputy details of the household budget survey, and can explain why those figures do not tally with the figures from the Revenue Commissioners. Part of the reason relates to the matters she has raised. Last week I referred to write-offs that are available and in the coming days I will refer to a more up to date study that has been completed by the Revenue Commissioners. Some years ago a study was undertaken which showed how high income earners write off a large amount of their tax through the use of capital allowances and so on. As I pointed out last Wednesday, the situation has improved and I will place further studies in the Oireachtas Library.
The Revenue's statistics and those from the household budget survey are not comparable. I have details concerning cars to which the Deputy referred, and that can be explained also. A considerable amount of tax is paid by high income earners. I have some details in my notes which I can send on to the Deputy. She will be surprised by the total amount of tax collected from a small proportion of earners.
We must move on to Question No. 48.
Income from tax-exempt matters, such as stallion fees or woodland earnings, are not included in tax returns. That is well known.
