Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Dáil Éireann díospóireacht -
Tuesday, 1 Feb 2005

Vol. 596 No. 3

Priority Questions.

Expenditure Review Initiative.

Richard Bruton

Ceist:

3 Mr. Bruton asked the Minister for Finance if he has satisfied himself with the progress under the expenditure review initiative; and if he will make a statement on the matter. [2791/05]

The first formal report from the expenditure review central steering committee on progress, under the expenditure review initiative for the period June 2002 to June 2004, was submitted to me on 3 November 2004 and forwarded to the Joint Committee on Finance and the Public Service on 25 November 2004. This report found that progress had been made by Departments and offices in undertaking systematic evaluation both within and outside the expenditure review initiative and in building an evaluation culture. However, it also highlighted some deficiencies in the process and made a number of recommendations designed to improve it.

I am committed to ensuring that we get better value for money from public expenditure. I would like to see greater progress being made in improving the arrangements for carrying out expenditure reviews and in completing reviews. I have, therefore, accepted the steering committee's recommendations.

I attach particular importance to the recommendation of the steering committee that expenditure reviews should encompass significant spending programmes, that they should be completed on time and that their recommendations should be followed up. The responsibility for implementation of these and all other recommendations rests in the first instance with Departments. I, therefore, wrote to all Ministers last November on receipt of the steering committee's report urging them to ensure that their Departments and offices take appropriate steps to implement the recommendations. My Department will shortly be inviting Departments and offices to submit topics to Government for the next round of expenditure reviews for the period 2005-07. I will take that opportunity to review progress in the interim and to ensure that the steering committee's recommendations for improvement are reflected in the next round of reviews.

Was the Minister as shocked as I was to discover that the follow-up on the expenditure review process was so poor? Is he aware that, of 143 studies to be completed over the period, only 20 were completed? Less than one in seven was completed and more than 30% of them were totally abandoned. In some of these cases, they were abandoned with the clear acquiescence of the Minister's Department. Why did the Minister acquiesce in the abandonment of so many of the studies? Why are so few studies being completed? Why was none of the recommendations of the Comptroller and Auditor General acted upon, following his report on this matter to the House in 2001? We still have the same problems to which he adverted, including poor quality of work, no central guidance, no quality assessment and no review of the impact of any of these studies on actual decisions. It is a shambles and the Minister needs to take this in hand.

It is not correct to say that only 20 studies were completed. By the end of September 2004, 93 reviews had been completed. Since then, a further four reviews have been finalised, bringing the total number of completed reviews to 97. That is significantly different from the number the Deputy suggests.

May I correct the Minister?

Let the Minister finish.

I expect that a number of reports will be finalised soon and that the expenditure review initiative momentum will increase as a result of the steering committee's report.

With regard to those which have not been completed, there are various reasons for that, some of which I might not agree with upon examination. I have accepted the steering committee's recommendations but it is not the only mechanism. There are others under the national development plan where other forms of evaluation, such as a sectoral evaluation, take place. I cannot give a general reason for 40 of them not being completed but there are reasons, some of which are good and some of which are bad. However, 97 have been completed.

Much of the hopeless decision making we have seen on spending has its roots in the cavalier attitude that the Minister's Department and other Ministers have to expenditure review. They do not care what the projections or impacts are. That cavalier attitude is the reason for the debacles of electronic voting and Punchestown.

The Minister is giving distorted information to the Dáil. There are not 93 completed in respect of the 2002 to 2004 report. If the Minister reads the document, he will see that is so.

A question, please.

The Minister should correct this. He is adding reviews that were conducted six years ago into his total to try to improve the numbers. He has completed only 14% of those in the programme. Does the Minister not agree that the issue of value for money must be taken seriously in the health service, environmental services and road programmes? This arises from the cavalier attitude outlined in the report. The Ministers do not care, they are not carrying out the reviews and nobody is forcing the issue.

I do not accept that. I am giving Members the facts as they are outlined in my supplementary information file. I am not trying to mislead the House. It is cavalier to suggest that there is no interest in value for money; there is. One of the successes of this Government has been its ability to work its budget, stay within budget and sometimes exceed budget expectations.

What is it delivering?

There are some areas and programmes where there needs to be greater progress. There have been some improvements both in evaluation and in performance indicators and in terms of what is being produced.

I have accepted the review committee's recommendations where it has identified room for improvement and I have told Ministers that I expect them to be implemented in the context of the next series of reviews to take place, which I agree should relate to significant areas of expenditure. That is the best way by which this initiative can be utilised.

Tax Code.

Joan Burton

Ceist:

4 Ms Burton asked the Minister for Finance if a preliminary finding has been received from the European Commission that this country’s tax exemption for income from stallion fees is in breach of EU competition law; when the exemption was first drawn to the attention of the Commission; the details of the response which the Government has made to the finding; the action he will take arising from the finding; and if he will make a statement on the matter. [2614/05]

The European Commission was advised of this relief in 1982 and on a number of occasions since then. The Commission has not given a preliminary ruling on this exemption. The Commission was in correspondence with my Department regarding this exemption most recently in April 2004 when it asked for information which would allow it to "establish whether the exemption may be considered compatible with state aid rules". This would clearly imply that the Commission has not made a determination on this matter. The requested information, which included details on the number of stallions, price of nominations, the relevant tax brackets, the estimated number of beneficiaries as well as a precise description of the exemption, was supplied to the Commission in July 2004. No further communication has been received from the Commission to date.

Does the Minister accept that, in effect, the European Commission has made a preliminary finding regarding the tax relief for stallions? Has the Government made any further responses recently to inquiries from the Commission for more information, particularly on the point that Irish tax rules relating to stallions breach competition law and act as a State aid to stallion owners and companies in Ireland? Why did the Department of Finance not advise the European Commission about this scheme? It started in 1969 and Ireland joined the European Union in 1973. The Department does not appear to have advised the Commission until 1997, when the scheme was extended. The Department seems to have been aware that, since February 1999, there was no proper notification to the European Commission as there ought to have been. Does the Minister have a view on the implications of this scenario?

In recent days, the Minister acknowledged to me in answer to a written question that there is now the phenomenon of the non-resident stallion. In the rules as redefined and reclarified, the owner of a stallion which is non-resident for up to six months in any year can continue to benefit from tax relief. How will the Commission's preliminary findings impact on this phenomenon?

All I can do is ask the Deputy to listen to the reply when I give it. There is no preliminary finding on the exemption and the Deputy's assertion that there is does not make it happen. The Deputy has also suggested that we have not been in touch with the Commission. We have answered any time it has contacted us about the matter. The Commission was advised of the relief in 1982 and on a number of occasions since. There is no mystery about it. As there has been no preliminary finding, I cannot give an answer to supplementary questions which were predicated on the assertion that there was. The Commission contacted us last in April 2004 and we answered in July 2004. We have not heard from the Commission since. The idea that the matter is exercising everyone's mind on a weekly basis and that some mystery attaches to it is unfounded.

I will explain the background to the relief. The stallion stud fees exemption was introduced in the Finance Act 1969 to encourage the development of the Irish bloodstock industry by creating an incentive to invest in Irish stallions. It applied to stallions standing at stud in the State and abroad. Income arising to the owner or part-owner of a stallion from the sale of services or the right to services is exempted from taxation but losses may not be set off against other income. Income from a stud farm is charged to tax in the same way as other profits from farming. The income which is charged to tax in full includes income from the keeping of mares and stallions at a farm. The only income which is exempt is the income arising from stallion fees. While the legislation was amended in the Finance Act 1985 to confine the tax exemption on stallion fees to income earned from stallions at stud in the State, income arising to a part-owner of a foreign-based stallion continued to be exempted where the share had been acquired by a breeder for the purpose of acquiring new breeding lines for a bloodstock enterprise carried on in the Republic of Ireland. That exempting measure is now contained in section 231 of the Taxes Consolidation Act 1997.

A key test of the entitlement to the exemption is whether a stallion is ordinarily kept on land in the State. An administrative ruling issued in November 1986 by the Revenue Commissioners in response to a perceived downturn in the industry confirmed that they would continue to regard as ordinarily kept on land in the State any stallion demonstrated to be temporarily exported for genuine commercial purposes for a period not exceeding two years. The ruling was withdrawn by the Revenue Commissioners in September 1998. Since then, stallions which are sent abroad to cover mares, mainly to the southern hemisphere and commonly for a period of up to six months, are regarded as ordinarily kept on land in the State. Except as otherwise provided for in the legislation, only those profits arising in the State are exempt.

As Deputy Burton knows, a study in this area was carried out by Indecon on behalf of the Irish Thoroughbred Breeders Association which suggested the estimated gross tax forgone was €3 million. We will have to conduct our own examination of the matter based on whatever information we can glean from this year's review. There are all sorts of questions. Of the yearlings which result from all this bloodstock breeding activity, 85% are exported and cost approximately €140 million. All this money is subject to taxation.

Stallions can be non-resident for six months a year with their owners still benefitting from the tax break. This tax break is in place at a time when pensioners pay tax on modest incomes. Are there tests of what constitutes six months non-residence for stallions? In particular, does the Cinderella rule apply? For example, if a stallion is out of the country before midnight, does that count as a full day?

I am taken by the obsession of the Labour Party with the stallion.

Has the Minister tips for tomorrow's races?

Indecon, which is regarded a reputable team of consultants, independently compiled a report on behalf of the Irish Thoroughbred Breeders Association and Horse Racing Ireland. Indecon estimates the gross figure foregone is €3 million, although I do not say I agree. I will find out about the Cinderella clause, about which the Deputy is worried, and whether a stallion must be out of the country before or after midnight. That does not make much sense but I will inquire into it.

It is important for non-resident taxpayers.

I did not know they had to be accompanied by a stallion.

Tax Collection.

Dan Boyle

Ceist:

5 Mr. Boyle asked the Minister for Finance if and the way in which arrangements will be changed for taxpayers who overpay tax. [2789/05]

Paul McGrath

Ceist:

6 Mr. P. McGrath asked the Minister for Finance if he has satisfied himself with the provisions for dealing with overpayment of taxation; and if he will make a statement on the matter. [2792/05]

I propose to take Questions Nos. 5 and 6 together.

I am taking it that the questions both relate to overpayments by PAYE taxpayers. The PAYE system, which has worked well for almost 45 years, is a "cumulative" deduction system designed to ensure, as far as possible, that an end of year return or adjustment is unnecessary in the vast majority of cases, provided that all due credits and allowances are reflected in the employee's tax credit certificate and that any non-PAYE income has been "coded-in" to the certificate. Where all due credits or allowances have not been given during the tax year, it is reasonable to expect the employee will look for a balancing statement after the end of the tax year. With regard to a number of reliefs such as medical expenses, it may be appropriate to wait until after the end of the year to claim a tax rebate.

I am advised by the Revenue Commissioners that they have no reason to doubt that the vast majority of PAYE workers receive their full entitlements each year. These entitlements are, in the first instance, reflected in the tax credit certificates issued at the beginning of each year. Revenue is in the process of issuing more than 2 million certificates to PAYE taxpayers for the 2005 tax year. These certificates reflect the most up-to-date information Revenue has on an individual and a leaflet giving details of the credits or reliefs to which taxpayers may be entitled accompanies them.

Where circumstances change in the middle of the tax year, for example, a marriage or a change of job, the employee will normally contact Revenue and arrange for a new tax credit certificate to issue. A number of PAYE taxpayers wait until after the end of the tax year to claim due allowances or credits, to return non-PAYE income or to make sure that there has been no underpayment or overpayment of PAYE tax. For the 2003 tax year, the latest year for which such figures are available, 287,258 PAYE taxpayers, representing 17% of the total PAYE taxpayer base of 1.6 million for that year, have so far made claims or requested reviews of their tax position, of which 8% indicated under payments, 17% resulted in no change and 75% resulted in repayments. A sum of €185 million has been repaid in respect of claims received and processed for 2003 and, on the basis of experience of late claims in previous years, this figure could be expected to eventually increase to an estimated €306 million when all future returns or claims for the 2003 tax year have been submitted. These figures should be seen in the context of the total PAYE revenue of €7.2 billion in 2003.

It is not possible or reasonable to extrapolate from the these figures estimates of overpayments or under payments for the full PAYE population. This is because claims or requests for review are, by definition, much more likely to come from those who know they have entitlements to reliefs for which they have not claimed in the first place, for example, medical expenses.

The tax code provides that no repayment can be made in the absence of a valid claim or return by the taxpayer. Without such a claim or return, Revenue may not have the full picture to determine entitlement to a rebate. For example, taxable payments from the Department of Social and Family Affairs or dividend income may not have been "coded-in" to the tax credit certificate or the taxpayer may have been self-employed for part of the year.

Revenue is engaged in a comprehensive modernisation of its PAYE computer system, which will include the ability to make amendments and claims over the Internet and much closer computer links with the Department of Social and Family Affairs. When the roll-out of the new system commences later on this year, it will provide a greatly improved level of service for PAYE taxpayers including, subject to defined parameters, a facility for automated reviews of liability where Revenue is satisfied that the figures are correct. The Finance Bill, which will be published next Thursday, will include provisions to underpin this new service.

The figure of €186 million quoted by the Minister, while small in the context of overall PAYE tax collected, is significant. We must make a case for equity between how those who are overcharged within the system are treated as opposed to those who evade tax. The Revenue Commissioners have performed excellently over recent years and have collected hundreds of millions of euro, a sum to which they have added by the imposition of penalties and significant interest rates. Does the Minister not feel that the same principle should apply to overcharged tax, if only to help efficiency within the Revenue Commissioners? There should be a significant interest rate placed on overcharged tax and penalties should be imposed on the Revenue Commissioners to ensure the quickest possible payment and the least possible occurrence of tax overpayment within the system.

The PAYE system has worked. I have given a detailed reply explaining how it works and that it is a cumulative deductive system. The equity of the position is safeguarded by the fact that claims are speedily dealt with. It is impossible to devise a system where there is an exact balance for every taxpayer, of whom there are 1.6 million, depending on their circumstances, for example subsequent claims for medical expenses or being partly self-employed during the course of the tax year.

There are particular circumstances which can arise and for which a taxpayer can claim at the end of the tax year when he or she receives his or her balancing statement. From the total of €7.2 billion collected under the PAYE system for the year 2003, the amount of overpayment was €185 million in respect of those claims already received and processed. That sum may rise to a figure of over €300 million. In the context of the total amount collected, it is probably approximately 3% or 4%. We are introducing further software into the system to enable taxpayers to interact and interface with the Revenue Commissioners on these issues in a way which will ensure the speedy resolution of any issues that might arise, depending on the individual circumstances of any taxpayer.

Of the persons who make claims for a review of their tax affairs for the previous tax year and who look for a balancing statement, 75% of the claims are positive and the person gets a refund. How many of those successful claims were spotted by Revenue or are any spotted by it? Were any refunds made on Revenue's initiative? Why is it that the computer system does not display such overpayments?

Why was a change made in the system which means a taxpayer cannot claim for overpayment for in excess of four years? The reclaim period has been cut to a four-year period. However, Revenue can pursue a taxpayer for as far back as it wants. Why has the Minister cut off the making of retrospective claims in excess of four years?

The Minister may have inadvertently misled the House when he said that Revenue turned around claims for balancing statements very quickly. There is a delay of at least ten weeks in one of the offices I know. Perhaps the Minister does not consider ten weeks to be a long delay but I do. The Minister should correct the record at some stage.

In many cases, overpayments relate to the fact that people do not claim for allowances to which they are entitled. Would the Minister not target some of those people? For example, 105,000 people make claims relating to medical expenses, which represents only 7% of households. Surely there are more people than that who could claim. This area could be targeted.

Some 90,000 people make claims for rent relief. I accept the Minister changed the allowance this year but if he made it more attractive to claim against private rented accommodation surely the scheme would be self-financing and there would be a gain in terms of bringing more people into the tax net.

A total of 75,000 customers have claimed relief on bin charges, which is only 5% of the total population. What is the other 95% doing with their rubbish? Surely people should be almost automatically entitled to claim for something like that because virtually every household has some kind of refuse collection. Does the Minister agree that he should target these kinds of areas? He should be proactive in ensuring taxpayers are not overpaying.

On the last point, based on the fact that different rates apply in different local authorities, I do not see how the Revenue Commissioners can centralise the figures at source.

It can be deducted at source.

The Deputy should allow the Minister to speak. He asked about six questions.

The Minister is wrong. A standard amount could be given no matter what people pay.

We cannot have a debate on the Minister's reply. There is a limited time available and if the Deputy wants answers he should refrain from interrupting the Minister.

The question——

A standard allowance can be provided no matter what one pays.

The Deputy should please allow the Minister to speak.

One would have to take advice from the Revenue Commissioners on how they could be proactive on this matter.

The Minister should get a PR adviser.

I do not have one. Does Deputy Burton have one?

This is Deputy Bruton's and Deputy Boyle's question.

I find I do not need one.

The Minister is very good humoured.

I do it all on my own.

The Minister should be allowed to answer the question.

They are my two PR advisers up at the back.

It must be the Minister's charm that does it.

I have forgotten all the questions.

The Minister should tell us about the stallions.

Relief on medical expenses.

These are matters to be taken up with the Revenue Commissioners. People have to be informed of their entitlements. I understand that when the Revenue Commissioners make contact with taxpayers they give out information with the forms to let people know what they are entitled to claim and so on. At the end of the day the Revenue Commissioners are there to collect revenue based on the submissions and assessments that people make to them. Unless people are evading their taxes they will not hear from the Revenue again. They just pay the balance and that is the end of it. In effect, the Deputy is suggesting that the Revenue Commissioners should change their role to become accountants as well as everything else for each individual taxpayer. The fact is that we have a tax system and as citizens we have to inform ourselves as to our entitlements and claim them where necessary if they are appropriate or relevant to our particular circumstances.

The Revenue Commissioners are providing a transparent system. In order to help taxpayers they are introducing a new system where people will have access to revenue records, allowances, credits and details of paying tax over the Internet at any time. They intend allowing people to amend their tax credit certificate on the web, either to claim an allowance or credit not on the certificate or to change the amount involved. They will enable people to request an on-line review of one's balancing statement based on Revenue's records and confirmation that details are correct and complete. They will also enable people to receive automatic repayment in certain cases where Revenue is fully satisfied from its records or from recent contact that a repayment is due. Revenue are not interested in taking more tax from people than what they are duly entitled to pay.

It is a matter for individual citizens to ensure they make a full claim to whatever credits are available to them under the law, based on their own prudence. These are individual matters between citizens and the Revenue Commissioners.

Flood Relief.

Tony Gregory

Ceist:

7 Mr. Gregory asked the Minister for Finance his plans for anti-flood measures in the Dublin city area for 2005; the funding that has been allocated for this work; when agreement will be reached with Dublin City Council for the programmes of work for 2005; and if the Tolka River between Annesley Bridge and Alfie Byrne Road, Dublin 1 will be dredged and the river walks strengthened and heightened.

The Office of Public Works is currently completing the phase 2 works on the River Tolka which were commenced in 2004 following public exhibition by Dublin City Council under part 8 of the Planning and Development Regulations 2001. The OPW and the city council are currently in discussions on a programme of works for 2005. The priority for the OPW since the works commenced in early 2003 has been to undertake works in those areas with high risk of flooding in an extreme event. The area around Distillery Road was identified as having a high risk.

Considerable work has already been completed in this area and the OPW is anxious to have the outstanding work completed at an early date. These have been the subject of negotiations between the city council and property developers as part of a proposed development in this area, with the intention that the developer would either undertake the works directly or else provide the funds to have them completed by the OPW.

Other works under consideration include repair works in the Botanic Gardens, underpinning of Dean Swift Bridge, upgrading of a wall downstream of Dean Swift Bridge and the widening of the bank in Griffith Park. The OPW has allocated €1 million for flood relief works in the Dublin city area in 2005. The OPW expects to meet city council officials within the coming weeks to agree on a programme of works for 2005.

As indicated in reply to the Deputy's questions on 16 December, the question of undertaking works in the East Wall area will be discussed. However, the current position is that no additional protection works are recommended by the consultants in the tidal reach of the river downstream of Luke Kelly Bridge, which includes the areas referred to by the Deputy. No flooding took place directly from the river in this area in the 2002 flood, although some low-lying areas were flooded via the drainage system.

Issues in this area are being addressed in the greater Dublin strategic drainage study, GDSDS, which is being undertaken by Dublin City Council. This study is expected to be completed shortly and is expected to include proposals to improve the storm water drainage system. One of the drainage measures already highlighted in the Tolka report is the provision of drainage flap valves on all storm water outlets as well as the installation of a pump station to allow storm water to be pumped into the river.

Additional information not given on the floor of the House.

List of works undertaken on River Tolka in Dublin city: new walls and embankments on Botanic Avenue; Griffith Park embankments; replacement of Woodville Road footbridge; walls downstream of Woodville Road footbridge to Drumcondra Bridge; walls and embankments at Tolka Cottages Park; raising of wall from Drumcondra Bridge to Tolka Park; protection works at corner of Tolka Park; walls and embankments from Tolka Park to Distillery Weir; widening of bank on Clonliffe College grounds; removal of Distillery Weir; scour damage repair at 112-114 Tolka Road; new walls downstream of Distillery Road Bridge on northern bank; and general channel maintenance.

Expenditure in City area by the OPW since 2003:

2003 —€1.18 million.

2004 —€1 million.

Expenditure in Fingal area by the OPW since 2003:

2003 —€20,000.

2004 —€700,000.

Expenditure in County Meath area by the OPW since 2003:

2003 —€750,000.

2004 —€1 million.

Is the Minister aware that the area to which his reply refers did not flood in 2002 but was flooded by the River Tolka on previous occasions? Is he also aware that insurance companies will not give flood insurance cover to householders in the East Wall-North Strand area because of the lack of Government action to address the issues and provide adequate anti-flooding measures?

I draw the House's attention to the East Wall-North Strand area, which lies between the mouth of the River Tolka and the point at which the Royal Canal enters the Liffey. It has been flooded from both sides in the past and has a history of flooding, yet no actual work has been carried out adjacent to this area. The issue is not being taken half seriously, if it is at all. Residents have drawn attention to the section of the River Tolka between Annesley Bridge and Alfie Byrne Road, to which I referred, which needs to be dredged and the river walls strengthened and heightened. Flood gates have been promised for the Royal Canal where it enters the Liffey but none of this work has been done. Meanwhile houses in East Wall——

Does the Deputy have a question?

Is the Minister aware that, meanwhile, some houses in East Wall cannot be bought or sold because insurance cover is being refused to prospective buyers or to householders because of this lack of action?

The Minister may not be aware of all this even though I have raised these issues with the Minister of State at the Department of Finance with responsibility for the OPW, Deputy Parlon.

Will he bring these matters to the attention of Dublin City Council and the Office of Public Works? They have been lax on this issue. Following the flooding of two years ago, there was an initial spurt with a great deal of work done in the Drumcondra area, a politically sensitive one. Since then, the work has all but ceased. People are concerned as in excess of 2,000 houses in the East Wall-North Strand area are susceptible to flooding and have been flooded in the past.

I understood Deputy Gregory's political sensitivity was constituency-wide. I will ensure the contributions raised during this exchange are brought to the attention of the Minister of State at the Department of Finance, Deputy Parlon, and Dublin City Council.

The Minister should not forget Fairview and Clontarf.

I hope these matters will be taken into account at the meeting that will take place shortly to discuss what works will be carried out by the Office of Public Works in respect of these potential flooding problems. I hope it will become clearer as to what will be done in the course of the year. I will bring the issues raised by Deputy Gregory to the attention of both parties.

What about the insurance issue?

That is a serious issue for residents in the area. This must be addressed in a manner to satisfy the insurance companies to re-insure those houses. It would be helped if, as a result of the meetings between Dublin City Council and the Office of Public Works, some works will be agreed. I will take these matters up with both parties. I do not have a detailed knowledge of the issues raised by Deputy Gregory. However, I will ensure they receive the attention suggested by the Deputy.

Barr
Roinn