Tax Compliance

Dáil Éireann Debate, Tuesday - 24 October 2017

Tuesday, 24 October 2017

Ceisteanna (13, 38)

Richard Boyd Barrett

Ceist:

13. Deputy Richard Boyd Barrett asked the Minister for Finance the figures for 2015 and 2016 and to date in 2017 for the tax revenue from the relevant contracts tax, RCT1, tax head; the gross figure and the figure net of refunds, deductions and allowances in the construction sector; the number of construction workers to which this relates; the comparative figures for the same years for PAYE workers in the construction sector; if he is satisfied that the tax take from RCT1 in the construction sector is fully capturing the sector's tax liability; and if he will make a statement on the matter. [44724/17]

Richard Boyd Barrett

Ceist:

38. Deputy Richard Boyd Barrett asked the Minister for Finance if he will report on recent efforts to clamp down on bogus self-employment; the number of workplace raids the Revenue Commissioners have participated in with the joint investigations unit; the nature and consequence of these raids; and if he will make a statement on the matter. [44722/17]

Freagraí ó Béal (23 píosaí cainte)

Deputy Richard Boyd Barrett

One of the main methods through which unscrupulous cowboy builders and building contractors deny construction workers proper pay and conditions and rob the taxpayer of, I would argue, tens if not hundreds of millions of euro is bogus self-employment, which is a euphemism for tax fraud. I wish to ascertain the latest net figures from the RCT1 tax head for construction workers. How many workers are employed in construction under that head? How does the net tax revenue compare with that from construction workers under the PAYE system?

Deputy Paschal Donohoe

I propose to take Questions Nos. 13 and 38 together.

I am informed by Revenue that many outdoor operations are carried out by their joint investigation units with some operations carried out on a multi-agency basis with other Departments or agencies such as the Department of Employment Affairs and Social Protection and the Workplace Relations Commission. The role of Revenue’s joint investigation units is to detect non-compliance with tax and duty obligations, including the non-operation of the PAYE system, arising from bogus self-employment.

As regards recent work of Revenue’s joint investigation units, for the first half of 2017, they carried out 5,450 outdoor visits, of which 1,841 were with other agencies. Revenue officers visited a total of 656 building sites, of which 231 visits were with other agencies. The results of this activity include the registering of 78 businesses as an employer for PAYE purposes, the registering of 685 individuals as employees and the registering of 145 persons as self-employed. As regards the construction sector, 38 persons were registered as an employer for PAYE purposes, 227 individuals were registered as employees and 44 persons were registered as self-employed. In addition, 291 individuals in the construction sector were re-classified from subcontractor to employee.

The Deputy will be aware that the PAYE system applies to the wages of employees in all sectors whereas relevant contracts tax, RCT, applies to subcontractors in the construction, meat processing and forestry sectors.

As to the Deputy’s specific question on RCT-related figures for 2015 and 2016 and to date in 2017, I will give the Deputy a table of the figures given to my officials by Revenue.

Deputy Richard Boyd Barrett

Today?

Deputy Paschal Donohoe

Yes. Broadly, on those figures for 2015, the tax collected under the RCT system was €200 million.

Deputy Richard Boyd Barrett

Is that net or gross?

Acting Chairman (Deputy John Lahart)

Deputy, through the Chair.

Deputy Paschal Donohoe

These are the tax collected overall figures. For 2016, it was €255.5 million. For 2017, to the end of September, the figure was €230.8 million.

Deputy Richard Boyd Barrett

I will study the details of the raids made by Revenue's joint investigation units afterwards. Those are interesting facts. I can tell the Minister, however, that the raid which I think was prompted by my question in July on the Dolphin's Barn refurbishment site was a joke. It took place in the canteen. People were invited to come into the canteen rather than officials from Revenue and the Workplace Relations Commission going around the site, grabbing people and asking them for their details. It was a way out of getting to the bottom of what was going on at that site.

Some of the people whose details were taken on that day, who would have been identified as being employed on that site on that day, got notification from Revenue that they started their employment only a month later, even though they had been working on that site for several months, which suggests a significant problem.

It is interesting that the Minister cannot tell whether these are gross or net figures. I put it to him that this is very important because the gross figure in previous years comes down to a net figure of next to nothing when offsets and repayments are taken into account. We need to get the net figure coming in under relevant contracts tax, RCT, after refunds and offsets.

Deputy Joan Burton

This was discussed in a previous question by another Deputy. I thank the Minister for saying that the publication of the report on bogus self-employment, which I commissioned as a Minister, and on which the Departments of Social Protection and Finance cooperated, including reference to the then Department of Jobs, Enterprise and Innovation, is imminent. I have been asking about this for well over a year. The report was very specific. There was extensive input from the trade unions, particularly the Irish Congress of Trade Unions, ICTU. I do not understand why it should not be released.

People are going onto sites and do not have a choice. A 25 year old construction worker may feel that-----

Deputy Richard Boyd Barrett

That was my question.

Acting Chairman (Deputy John Lahart)

The Deputy is over time.

Deputy Joan Burton

-----he will never be injured but many who end up with injuries have no social insurance coverage and that can affect them for the rest of their lives.

Deputy Paschal Donohoe

I will provide a table for Deputy Boyd Barrett that will give, in a fair amount of detail, the figures he was looking for. I do not accept the distinction between gross and net taxation. People pay their tax and that is collected but the table I have here goes through the tax collected under the RCT system, and any tax then offset against tax liabilities and so on. I will provide all of that information to the Deputy.

I cannot comment on the operation mounted on the site the Deputy referred to because I do not have information on how it was conducted. It is clear from the number of visits made by the Revenue Commissioners, and the outcome of those visits, as I told the House a moment ago, that it is having an effect in dealing with this issue. Looking at the number of employees registered, at the reclassification of individuals, this appears to be the very kind of activity that the Deputy has been calling for. These are the figures for the number of on-site visits and their effect. I will soon receive a report from the working group I mentioned earlier to Deputy Burton and others and the paper emerging from that will be published.

Deputy Richard Boyd Barrett

I would welcome any action by the Government on this matter and indeed the raid on that site that followed the question I raised with the Minister. The problem is that it has not come with a proper outcome. The workers involved received notification from Revenue that they started their employment in August following the question I raised here in July, even though they were on site in July and would have got the workers' details then and the workers were employed from April or May. What was going on before August? Are the subcontractor and main contractor being held accountable for the fact that there was undoubtedly tax fraud going on prior to that? Still the record has not been rectified.

The difference between net and gross is very important. In 2009, for example, there was €436 million gross tax paid under RCT. The offsets were €490 million, meaning that the revenue for RCT net was minus €53 million. Less than no tax came in from RCT. There were probably 60,000 or 70,000 workers under that heading, with no tax coming in. By comparison, under pay as you earn, PAYE, tax, there would be hundreds of millions of euro in tax. That is the comparison we need to get to because the public is losing tax revenue because of bogus self-employment.

Deputy Paschal Donohoe

The Deputy never made reference in his question to supplying me with details of a particular raid or visit attached as he could have done. If he had given me that information I might have been able to respond to some of the points he made publicly or privately. The Deputy, however, chose not to do so.

Deputy Richard Boyd Barrett

Because I have another question. The Minister's answer related to other matters I had not asked about.

Deputy Paschal Donohoe

The Deputy comes in here and raises allegations about a particular activity of the Revenue Commissioners but if he had given me advance notice of that issue I might be in a position to respond but the Deputy did not do that.

Deputy Richard Boyd Barrett

I was responding to the Minister's comment about raids.

Deputy Paschal Donohoe

In respect of the efforts of the Revenue Commissioners to deal with this matter I have outlined the amount of activity that has happened in response-----

Deputy Richard Boyd Barrett

That is what I was responding to.

Deputy Paschal Donohoe

I am puzzled as to why the Deputy wants to keep interrupting me on this matter. He alleges that nothing is happening and when I try to tell him-----

Deputy Richard Boyd Barrett

I did not say that.

Deputy Paschal Donohoe

That is fair. He does not allege that nothing is happening but he alleges that not enough is happening and when I try to update the House on what is happening the Deputy wants to continue to interrupt me in so doing.

I was about to say, before the Deputy concluded, that compliance activity in this sector alone, for example in 2016, yielded €54.7 million for the Exchequer, which is a result of 17,801 interventions made by the Revenue Commissioners, which points to how seriously this matter is being taken.

Written Answers are published on the Oireachtas website.