Dáil Éireann Debate, Tuesday - 6 October 2009
244 Deputy Mary Upton asked the Minister for Finance his plans to reduce the complexity of the taxation and relief system here in order to reduce the ability of those with access to the best advice from reducing their tax burden while low and middle income workers cannot avail of these breaks; and if he will make a statement on the matter. [33005/09]
Amharc ar fhreagraIn recent years many legislative, administrative and technological initiatives have been implemented to improve and simplify the manner in which taxes and duties are administered. Making it as easy as possible for all customers to fulfil their obligations and claim their entitlements is a key objective and is a cornerstone of Revenue's strategy of maximising voluntary compliance.
Initiatives of particular benefit to Pay as You Earn (PAYE) and self-employed are as follows:
PAYE Taxpayer Simplification Initiatives. A number of approaches have been taken in recent years specifically aimed at making PAYE customers aware of their tax credit and relief entitlements and making it easier to claim them.
On-line facilities are now available to PAYE customers. Once registered, the self-service facilities enable PAYE customers to manage their tax affairs in a quick, free and secure manner and at a time that suits them best.
Other self-service options available include text messaging and touch-tone telephone.
Revenue also issued a new PAYE Guide for Employees with 2009 Tax Credit Certificates. The guide, written in simple language, explains the mechanisms of the PAYE system, explains tax credits and reliefs, encourages customers to apply for them and promotes PAYE Anytime.
Revenue has been making considerable efforts to automate tax credit and relief entitlements. Developments in this area include the automatic granting of age credits, the introduction of DIRT exempt accounts for over 65s and the issue of automatic refunds for tuition fees and non-reimbursed amounts for prescribed drugs.
Mortgage interest relief is provided at source through financial institutions under arrangements which were put in place with effect from 1 January 2002, that is the TRS system. This means that the mortgage holders get the benefit of the relief directly from their mortgage providers in the form of reduced monthly repayments which take account of the tax relief. In addition, health insurance relief is also provided at source by way of reduced payments.
Tax relief on contributions to occupational pension schemes for PAYE earners is provided on a "net pay" basis. This means that employee pensions contributions are deducted from gross pay by employers before income tax and levies are calculated.
Simplification Initiatives for Self-Employed Taxpayers
Registration thresholds for VAT have been increased in recent years to reduce the administrative burden on smaller businesses.
Revenue reduced the frequency of tax returns and payments required from smaller businesses during 2006 and 2007. It regularly reviews the liability of cases and transfers customers to the less frequent filing programme where eligibility criteria are met. Accordingly simplified arrangements were extended to include newly eligible customers from 1 January 2009. Over 90,000 businesses currently benefit from less frequent PAYE/PRSI and VAT filing obligations.
With a view to making tax compliance easier for small businesses, Revenue carried out a detailed review of self-assessed returns and identified taxpayers to whom the shorter Form 11E is more appropriate. As a result the 2008 Form 11E issued to 125,000 customers who file paper returns as opposed to 21,000 in 2007. Revenue will continue to review self-assessed returns with the intention of issuing a shorter form to as many categories of customers as possible.
A new system of accounting for VAT on construction services came into effect from 1 September 2008. The effect of the reverse charge mechanism is that it simplifies the operation of VAT in the sector and there are cash flow benefits to principals.
A new Guide to VAT was also published in July 2008 and updated by Addendum to include the Finance Act (No. 2) 2008 changes. There are over fifty VAT Information leaflets available in support of the Guide.
Revenue's On-line Service (ROS) offers business and individuals a quick, secure and cost effective method to manage their tax affairs on-line and the number of customers using it continues to increase. Revenue has a number of incentives to encourage customers to avail of ROS.
Revenue's website (www.revenue.ie) was redesigned and launched in December 2008 following wide-ranging consultation and was aimed at delivering improvements in quality and timeliness, information and services.
In June 2009, Revenue launched its new National Excise Licence Office which reduces the administrative burden associated with Excise Licence obligations.
Work will continue in this area with the aim of reducing any remaining complexity in the taxation and relief system, both as it pertains to the individual taxpayer and small businesses.
