January
31st January
Adjournment Debate – Motorola Job Lay Off Announcement
Mr. Boyle: The Minister will be aware that the Motorola factory is sited in our shared constituency. However, its 350 workers come from all the Cork city and county constituencies and hence the interest of two other Cork colleagues this evening. I would still argue that the effect will be greatest in our constituency. More of the workers come from Cork South-Central and should the Motorola company cease activities the knock-on effect on service industries will be most felt there.
The Minister’s comments in the local media have not assuaged fears. Perhaps he is being realistic in his assessment. We need to know what was known when and what the reality of the situation is. I fear that we could be engaged — I am not sure on whose behalf — in a cruel act of news management. What is a 30-day consultation period and why is it that just today another company, Thomson Scientific and Healthcare in Limerick, has chosen to go down exactly the same route? Is this the new way to make job announcements? It gives the prospect of jobs being lost and perhaps, at the most positive, scaling back some of those losses or delaying the eventual decision by a number of weeks. If this is the case it is the cruellest of decision-making methods.
The Government seems to be in thrall to the globalised world. This week’s Central Bank quarterly report shows that the proportion of our economy based on manufacturing industry is dwindling. The figures do not lie. More of our economic activity is in services and less is in manufacturing industry. What is the Government’s response? Does it have a strategy to protect and enhance manufacturing industry? We have had a number of reports about developing indigenous industry but we have yet to see the effect of any such jobs coming on stream and becoming a more vibrant element of the economy.
We need to ask questions about manufacturing industry. We had the recent announcement of the FCI jobs in Fermoy. That operation involved a manufacturing process, albeit at a different level. Even in the industrial estate where Motorola is located, in recent years another large manufacturer, Bourns Electronics, closed. These are warning signs. That these are all located in the Cork area is of greater concern to those of us representing the area. As the Minister responsible, Deputy Martin has a particular responsibility to address the fears that exist and give some assurance that this is not the beginning of a different future industrial environment in the Cork area. We need an appropriate industrial mix in the Cork area. If the IT and electronic sectors suffer, other factories and companies may have questions about their future. We should hear about this in media reports and prepare ourselves for impending decisions in three to four weeks’ time. There should be a wide-ranging analysis of manufacturing industry and the Government’s policy on that, particularly in the electronics and IT sectors and particularly in the Cork area.
In a different economic climate a State agency existed to pre-empt firms or industries at risk and decide whether measures could be taken to protect them. Maybe under EU rules that has changed and the Government cannot put capital directly into such companies. We should, however, consider establishing a State agency to do the type of work that Foras Forbartha Teoranta used to do, especially because of the job displacement in this field. It could examine whether there are dangers coming down the track and whether we can protect or enhance these industries.
The Government is not asking those questions. It is taking too much of a hands in the air attitude given the number of jobs in this industry that are affected in the Cork region. More jobs are affected in the add-on industries which support and service these companies. I urge the Minister to use the opportunity of the longer than usual contribution he will make on this Adjournment debate to address these questions and at least offer some immediate hope for the future of the workers in Motorola and for the future of manufacturing industry in the Cork area.
31st January
Private Members Motion (Independents) Cancer Care Services
Mr. Boyle: I welcome this motion in the names of the Independent Deputies and the opportunity it affords us to discuss the standard of cancer services available and the need for an effective cancer strategy here. I also welcome the fact that the Minister for Health and Children is present for the debate, as far too often during Private Members’ time members of the Government have chosen not to respond directly to many Opposition Private Members’ motions.
As has been outlined, access to cancer services is very much a question of luck depending on the person involved. It is a game of geographic lotto. Where a person lives determines whether he or she will have a sufficiently early identification of a condition and whether he or she has direct access to the services that will assist in their treatment. Different standards of care apply in terms of access to palliative care for many citizens who have various cancers that are inoperable. This hotch potch approach to standards of care has caused a great deal of public concern.
The Government strategy in regard to breast cancer has been mentioned but it must be reiterated that until the BreastCheck screening programme is rolled out throughout the country none of us in this House can be satisfied with the multi-standard level of care afforded to women. I represent Cork South-Central. Prior to the last general election a promise was made that BreastCheck would be rolled out to the southern and western regions. It has been promised that BreastCheck will be up and running in Cork city by July of this year. I admit that some progress has been made. A site for the facility has been identified, cleared and work has commenced on the foundations. However, given that tomorrow is 1 February, I am less than optimistic that the deadline of July for the provision of service will be met. It will probably be available by the end of this year.
I am sure the Minister will indicate that a clinical director has been appointed but the process of employing radiographers to provide that service is still under way. As the Minister is probably only too well aware, one of the main problems with our health service is identifying professionals to fill such positions in sufficient time. The indication that there is a strongly likelihood that BreastCheck will be up and running in Cork in July or August this year, as still seems to be indicated by the Minister, the Government and BreastCheck, is not likely to hold true.
The wider cancer strategy needs to be more focused. We, as a society, do not have sufficient information about the genetic and environmental factors that cause many cancers. We know that something in Celtic genes makes us more predisposed towards certain types of cancers, but not enough questions are asked as often as they should be about the environmental factors involved, namely, the anecdotal evidence of the existence of clusters of incidents of cancers among people living on the same street or in small communities. Information is not being compiled that would allow us to answer why these cancer incidents are occurring.
The National Cancer Registry based in Cork does valuable work but its statistics are based on too wide a geographical basis. They might reveal the number of people in counties Cork or Dublin who have cancer but they do not give further detail. If we are to have faith in the quality of information on this area, information is required in electoral districts of the existence of cancers, the types of cancers and the number of people affected to enable us to pinpoint to the degree possible with the technology available the existence of clusters of cancers throughout the country. Without such information, a cancer strategy will always be ineffective.
I reiterate the point made by my party leader and colleague that the size of the preventative health care and health education budgets in the Department of Health and Children make it impossible to get the message across that much can be done on an individual basis and within communities to prevent to some extent the existence of the condition of cancer. If we were to invest sufficient resources in this area, we might be largely able to avoid trying to treat the problem at a later stage in terms of hospital and palliative care.
25th January
Health Bill
Mr. Boyle: The Bill has been described in this Chamber as reforming legislation, but unfortunately it is reactive legislation. The argument for an independent inspectorate of nursing homes and residential institutions has long been made, but is only reluctantly being acceded to. The system that was in place was clearly unsuccessful and the deletion of certain sections of the Health (Nursing Homes) Act 1990 demonstrates the Government has finally come to that conclusion. It is by no means a coincidence that it was a Fianna Fáil-Progressive Democrats Government that enacted that legislation. We are not just talking about the need to establish consistent and humane standards of care for the elderly, but also the philosophy of that care. I wish to speak about measures in the Bill that undermine the premise that care can be provided humanely in the future.
The health boards and their successor, the Health Service Executive, are the last bodies that should have been involved in the monitoring and regulation of residential institutions and nursing homes because they have too many vested interests. Too many compromised interests were involved in such an inspection process. A see no evil approach was adopted because of the need to keep people in residential care in order that they would not become, as obscenely described in debate, bed blockers. On account of that attitude, the economics of health care were paramount in the framing of our policy. We have seen the net result of this in exposures through the national media.
Not only were compromises in place, the resources needed to conduct a valid inspection have not been available since the enactment of the Health (Nursing Homes) Act 1990. We have examples of institutions that were never inspected over many years. Where reports were produced there are damning indictments of the institutions in question, but no actions were taken. On those grounds, the existing system has been an utter failure. It is time for an independent inspectorate to try to correct past mistakes and ensure they do not recur.
I have some concerns about whether this legislation as framed can do this. The establishment of the Office of Chief Inspector of Social Services undoubtedly creates an independent office. However, the remit of that office, which covers residential nursing homes and residential institutions for people with disabilities and children in care, seems very broad. We must ask what resources will be available to an office with such a large remit. If the mistakes of the past are repeated because of a lack of resources, we will continue to have a situation where many residential institutions will not be inspected over long periods. If the House merely replicates the 1990 Act in another form, it does the country a disservice.
The remit of the Health Information and Quality Authority also gives rise to concern, in particular the provision relating to charging for services other than for information given to the Minister, the HSE or other public service sectors. This indicates the philosophy held by the Minister for Health and Children that health and care services can best be provided through the private sector. If we establish a body that is meant to act on largely commercial principles in carrying out its remit of obtaining care standards — care that will, according to the Government, be provided in the private sector — the House will have done a bad day’s work.
The Government has failed utterly in the care of elderly people. We have heard that 5% of the elderly population is catered for in residential institutions. Not only have some of this 5% suffered physical and emotional abuse, they have also suffered economic abuse through the manner in which their payments were stopped. They also suffered environmental abuse in terms of their living conditions and the preparation of their food, as articulately illustrated by Deputy O’Dowd.
Questions must also be asked about the Government’s philosophy towards the care of the other 95% of our elderly, mainly provided through family or voluntary resources. To a large extent, the Government has failed to come through in this regard. Efforts to be cost effective have led to penny-pinching and a reduction in the home help service. Voluntary bodies have had to pick up the slack and they are largely unsupported in the provision of services that the State should provide. Not only do they provide the services, they must also spend much of their time and resources fundraising to meet their commitments. As long as that philosophy continues, the Government’s credibility on the issue of care of the elderly must be questioned.
I use this opportunity to speak on the wider issue of the economic abuse of people in nursing homes, which was one of the triggers for the wider debate. Unfortunately, the debate continues as more discoveries and disclosures are made. A further story is reported in the media today regarding how health boards and the HSE held on to the interest earned from the income of people in residential care. If this debate was not being held in the artificial circumstances of the Order of Business decided before the House rose in December, we would have the opportunity for a direct statement from the Minister for Health and Children on how this anomaly and further injustice to people in care will be corrected. That statement should be made at the earliest opportunity, next week when the House has properly convened.
The report in today’s media states that at least €1.5 million in interest withheld for 2005 alone will be returned to people. We know that the situation regarding the moneys of people in nursing homes goes back over 30 years, to the 1970s. If we aggregate the projected interest over a 30 year period — we should remember that interest rates for much of that period were in high double figures — we recognise the need for a serious statement to be made to the House. Members must be allowed to question the Minister on what appears to be the withholding of further information as to the true extent of the problem. Perhaps the Minister or a Minister of State will take the opportunity to comment on the conclusion of this debate. If it was on the record it would allow us have a wider debate when the House properly convenes next week.
One of the aspects of the Bill I found most interesting relates to the Schedule which repeals many of the sections of previous health care legislation. This debate has been informed by the need to discuss care of the elderly so there has been little debate on whether the additional functions of the chief inspector of social services with regard to people with disabilities and children in residential care are adequately covered in the Bill. Unfortunately, this is due to the truncated nature of this debate. Owing to the Order of Business last December, we have no opportunity to have that debate. I ask that the Government give more emphasis to that on Committee and Report Stages. I fear that by passing this legislation we will allow a lack of proper consideration in two areas of care. The nature of this debate means that they are not being properly considered.
On those grounds, although the Green Party supports the establishment of the Health Information and Quality Authority and the Office of the Chief Inspector of Social Services, there are real concerns. There is a need for wider debate and for the legislative process to be worked through properly in this House. Many of us still need to be convinced that this legislation, once on the Statute Book, will deal with needs that sadly still exist in society.
24th January
Finance Committee – Questioning of the Revenue Commissioners on Tax Reliefs
Deputy Boyle: I have a few brief questions for Mr. Gillanders and Mr. Rigney. Returning to the question of the moratorium in regard to applying for unclaimed tax, whether it be the current four year period or the former ten year period, has legal advice been sought from the Attorney General as to whether there are sound legal grounds for that? An argument could be made that no moratorium applies in regard to overpaid tax and why should one apply at all, whether for four years or ten years, for claiming tax from the Revenue system?
The modelling that takes place before the introduction of any tax credit may be largely a matter for the Department of Finance but I am curious, as was Deputy Ó Coaláin, to know whether any tic-tacking is done before a tax credit is introduced and whether the Revenue offers advice on the introduction of such a credit? Is there knowledge about the likely take-up of a tax credit prior to its introduction and does the Revenue use such information to ascertain whether such a tax credit, when introduced, is subsequently successful?
The large number of people on the minimum wage who are outside the tax net is an issue that was glossed over in earlier questions. A question of tax equity arises in regard to a large number of the smaller tax credits such as trade union membership, rent or medical expenses, irrespective of whether they are being sufficiently claimed, for which people on the minimum wage are not earning enough to claim in any event. Surely a question of tax equity arises if people are not earning enough to avail of those credits, while people who earn more pay less for each of those services. That brings into focus the point Senator Mansergh made about the possibility of refundable tax credits, which would even out that playing pitch, but I understand that is a policy question.
With regard to points Senator Mansergh made on transport based relief and public transport based relief in particular, has any review of this scheme taken place? I acknowledge that the representatives have undertaken to give figures of the take-up of the scheme. A difficulty concerning the scheme is that the relief is administered through employers rather than given directly to the individuals concerned. That explains why it is not well known and the take-up of it is not as large as it could be. Has Revenue undertaken an internal review of this scheme?
Mr. Gillanders: I will go through those questions. The change to four years, applying to the look-back period, was introduced by way of an Act of the Oireachtas. We operate on a legal presumption that Acts of the Oireachtas are the law of the land and are constitutional.
Deputy Boyle: Did Mr. Gillanders also make that mistake?
Mr. Gillanders: Regarding advice on credits and on tax policy, as Senator Mansergh said, we are active in the tax strategy group. We work closely with Department on Finance on policy matters. We would certainly give advice on likely costs, on likely take-up of reliefs, which is related to the cost issue, and on administrative practicality.
Deputy Boyle: Is Revenue asked about the effectiveness of a tax credit as opposed to a direct grant? Sometimes policy decisions are made whereby grants are given for capital provision, for instance, and sometimes it is in the form of a tax relief.
Mr. Gillanders: That kind of issue came up last week in regard to the bin charges credit when Mr. Dermot O'Brien from the Irish Taxation Institute said it might be more effective to deal with that issue through other means. We would give opinions and, I suppose, rational and balanced views on what is proposed, including costings. Where it seems to us that something would be better done through a system of grants, then we would say so but there are other considerations. It is part of a much wider political process and if the political system chooses to operate things through tax, then it is our duty simply to administer them. We give advice, a decision is made and then we get on with it. That is the answer to that question.
The question of a refundable tax credit system would be a huge issue for us. It would need to be fully thought out how it would work, what it would do, how it would interact with other possible policy alternatives, such as social income schemes, and so forth.
17th January
Finance Committee – Presentations on Tax Reliefs
Deputy Boyle: I apologise for my late arrival, which was due to a coincidental meeting I had arranged with the National Women's Council of Ireland. I have, however, received copies of the representatives' presentations.
I wish to act as devil's advocate with my question. In a sense, the three and, occasionally, four figure amounts involved in the tax reliefs under discussion mean that they tend to be claimed by relatively few people. Has any exercise been carried out on whether too many tax reliefs exist or the effect on the standard and higher tax rates of reducing the number of tax reliefs currently available?
Mr. Redmond: To respond to the Deputy's point, approximately a year ago we submitted to this committee a report in which we suggested a good methodology be put in place to measure the effectiveness of all reliefs and whether people know about and are availing of them, and that they should be phased out if they are not being utilised. It supports the Deputy's comments that we need to constantly evaluate all reliefs and ensure they are delivering what was intended by the Oireachtas in the manner they should. If they are not doing so, the Deputy is correct in stating that the system should be simplified by removing them.
Deputy Boyle: How does Ireland compare with similar pay-as-you-earn systems in terms of the number of reliefs available to the individual taxpayer?
Mr. Redmond: We do not have that information with us today but we will certainly undertake to try to provide the committee with information on that point.
Chairman: Will Mr. Jewell respond? We do not intend making him redundant. That was a light-hearted remark.
Mr. Jewell: I thought it important to make the point that rather than redundancy - the Chairman is correct and I agree - it will be all the more important that we, as the independent organisation, ensure that an organisation that has just had its taxpayers' contribution double to €8.5 million will do its work and get involved on their behalf. We will keep chasing this.
7th December
Public Accounts Committee – Questioning of the Revenue Commissioners and the Office of Appeals Commissioners
Deputy Boyle: I wish to begin with chapter 2.10. In 2005, the Office of the Appeal Commissioners received €607,000 and it spent €399,000. It, therefore, returned to the Exchequer €208,000 or just over one third of its budget. This was the third year in a row that the commissioners had done so. In 2004, it returned 37% of its budget and in 2003 it returned 39%. It appears that in each of these years the office made attempts to increase its number of staff. Mr. O'Callaghan indicated that this is still the intention. What factors are preventing people from being employed?
Mr. O'Callaghan: We encountered a degree of difficulty in that the kind of people we need must have excellent reporting skills. We want people who will be able to assist us in reporting on the cases on which we are working and perhaps to maintain files, etc. They need good legal qualifications and reporting skills. The difficulty was that we were informed that we were obliged to recruit within the Civil Service. To be blunt, we have encountered a number of problems in terms of dealing with red tape. That is why, as the Deputy correctly pointed out, each year we have returned to the Exchequer a financial provision in respect of employing staff to fill gaps relating to the reporting of cases and the preparation of an annual report. The actual functioning of the office on a day-to-day basis is not compromised but there are difficulties in respect of the additional matters to which I refer.
Deputy Boyle: Mr. O'Callaghan used the term "red tape". Is he referring to the Public Appointments Commission in that regard?
Mr. O'Callaghan: Yes, that kind of thing.
Deputy Boyle: Have jobs been advertised?
Mr. O'Callaghan: This is another problem. Until we have somebody in the office, we do not know exactly the level of input we need. We do not want to employ somebody on a full-time basis and discover that their services are not necessary. At present, the two us do everything. For example, we type our own letters, etc. We have one very able administrator who deals with the Revenue, our post and so on. We do not know until we have somebody in the office the level of input that will be required. We do not want to employ someone and discover that, four days a week, they are sitting around doing nothing.
Deputy Boyle: May I suggest that Mr. O'Callaghan is overworked?
Mr. O'Callaghan: We are not claiming that we are overworked.
Deputy Boyle: The appeal commissioners have not produced an annual report, they do not have a statement of strategy and the website, which is maintained on a voluntary basis by the Institute of Taxation, does not contain information on many cases that might be referred to by way of precedent in order to aid the process of further appeals. Three to four years seems an awfully long period to have been tied up in red tape in respect of appointing staff that are obviously needed.
Mr. O'Callaghan: It does. It is extremely difficult to appoint people. The processes involved are not easy to deal with. We have had various meetings with officials and we have not been able to make headway.
Deputy Boyle: When members discover where they stand next May or June, they might be able to offer some assistance.
It can take quite a long time for the appeal commissioners and, initially, the Revenue Commissioners - both Mr. O'Callaghan and Mr. Daly insisted that there are no delays in this regard - to process cases. If a person was so minded, he or she could argue that the question of tax avoidance is as much a matter of time and avoiding final payment as it is a question of the sums involved. Some people's involvement with this process might last up to four years. There are instances where the appeal commissioners have heard cases and have not issued decisions for 12 months or more.
Mr. O'Callaghan: That is very unlikely. On what basis is the Deputy making such claims?
Deputy Boyle: On the basis of some of the information I have been given in respect of the audit results, etc. For example, the time duration between the hearing of an appeal case and the making of a determination ranges between three and 15 months.
Mr. O'Callaghan: A period of 15 months would be extraordinarily unusual. From where did the Deputy obtain that information?
Deputy Boyle: I see that the information to which I refer probably relates to the initial process involving the Revenue Commissioners.
Mr. O'Callaghan: There are problems in reporting these matters. In many cases, people lodge appeals to keep the process going. If one does not appeal an assessment, the tax becomes final and payable. A person might be in correspondence with the Revenue in respect of a matter and an assessment will issue and an appeal will be lodged in respect of it. Further correspondence with the Revenue will then ensue. We do not receive any notice in this regard.
There is no reason we should have. The Revenue is looking for information and the taxpayer is making arguments. In 99.9% of such cases agreement is reach and the 0.1% that come to us might well be listed several years after the initial correspondence. It is difficult to say what the timescale for individual appeals is. In so far as somebody defers payment, he or she is hit with hefty interest and late payment penalties if he or she has not paid the tax and has tried to use the appeals system to defer it.
Deputy Boyle: The process is lengthy.
Mr. O'Callaghan: It can be but, equally, if we receive a referral today from an inspector of taxes saying he wants to list a case in Galway at the end of January, we will put it down for hearing. There is not a lengthy time lag between us receiving a request and listing it. We seek submissions and we list it once we have received them. Typically we list it within a month or six weeks of receipt of the submissions.
Deputy Boyle: Perhaps it is best to begin with Mr. Daly and discuss the process used by Revenue and how the case ends up in the office of the appeal commissioners. A case goes from a case officer to the district manager to an appeals committee within the Revenue, which can take up to 27 months. Is that correct?
Mr. Daly: I echo the point made by Commissioner O'Callaghan in that many people lodge appeals as part of the process. When one of our inspectors or a taxpayer decides to appeal, both parties must first engage because an AH1 form must be forwarded to the appeal commissioners before it can be listed for a hearing. Usually, an attempt is made to agree the content of that form, which is not difficult. However, there is often a significant time lag before we go to the appeal commissioners for a listing because of the engagement between the taxpayer or the agent and Revenue. Most cases are settled.
With respect to those that are not, when the request is made to the commissioners for listing, they seek a written submission from the taxpayer, a reply from Revenue and eventually those submissions will be exchanged, though not always. The report contains many figures relating to elapsed time but if the median is taken, approximately 50% of cases are processed within seven months while the remainder take longer. Then there is a number of extraordinary outlier cases. One case mentioned in the report took 79 months but it was a complex capital allowance case. A similar issue was decided in another case, which is being appealed, and that is the reason those cases do not go forward. This is a judicial process and, in the normal way, these cases take time. I am not satisfied this is ideal and I would like the process to be speeded up but, as a process that involves settlement discussions between taxpayers and Revenue, which can ultimately be resolved through a judicial framework, it is not extraordinarily bad.
Issues arise relating to the statistics and the monitoring of appeals. We have moved extensively to improve that in recent times. The Deputy mentioned that all appeals are forwarded to the Revenue appeals committee. However, they do not formally go to the committee. The committee is kept for serious cases involving precedent and in which major issues are at stake. Other than that, appeals come straight from the Revenue district. However, we have put a new system in place, as the Comptroller and Auditor General mentioned in his opening remarks, whereby AH1 forms will be forwarded to the appeals committee in Revenue so that we will have a record in the future of the process of the appeals. We have also provided the opportunity for local managers in districts to obtain information from time to time from our systems about the progress of appeals.
The Comptroller and Auditor General had to use our Stop 16 as the formula for extracting this information. While it is pretty reliable, Stop 16 might have been used occasionally for items in the past other than appeals and, therefore, it might not tell the full story.
Deputy Boyle: Does Mr. O'Callaghan have updated statistics on how many appeals are referred to the Circuit, High and Supreme Courts on a point of law?
Mr. O'Callaghan: We do not because once we sign off on a case and give our decision, it is up to the taxpayer to take the case to the Circuit Court. We do not ever receive a report back from the Circuit or High Courts, which is a little unusual because the format of an appeal to the High Court is by way of a case stated. We sign off a case stated and forward it to the High Court. Typically the question at the end of the process is whether we were correct in law in finding as we did. The High Court gives a decision but it never writes back to us to tell us what has been decided. It is recorded at that point. We do not have statistics for that, as they are not part of the process.
Deputy Boyle: Therefore, the Revenue does not track them.
Mr. Daly: We have assembled information on that as part of the process of trying to get a greater handle on all of this. Between 2000 and 2004, 20 cases were heard in the Circuit Court, 24 cases in the High Court and four in the Supreme Court. As Commissioner O'Callaghan has mentioned, we have only the right of re-hearing in the Circuit Court in respect of capital acquisition tax cases but the Law Reform Commission has recommended that Revenue should have a right of re-hearing in all cases to put us on a level playing field with the taxpayer but that has not been implemented.
Deputy Boyle: I refer to chapter 2.9, which deals with capital gains tax. Mr. Daly stated the receipts for CGT have increased significantly since 2001 by almost €2.5 billion. Usually for a self-assessment tax, it is higher than the amount raised from income tax and non-PAYE sources. The Comptroller and Auditor General in examining this asked a series of questions about available information and the controls exercised by Revenue. The officials responded to many of those. Can Mr. Daly quantify the degree to which he believes income might be declared as capital gains in the system? A number of cases have been identified by the larger cases unit within Revenue, particularly following a recent investigation. Is there a greater incidence of that occurring in cases where the yield is between €250,000 and €500,000?
Mr. Daly: I cannot quantify a figure for the tax at risk. We have had a number of projects focusing on this over several years because it is the big risk we see where a personal tax rate is 42% and CGT is half that. We are all the time worried about conversion of income to a gain or a gift because the same considerations apply, as gift tax is half the income tax rate.
Our large cases division did an exercise and Dublin and some of the other regions have done other exercises in more recent times. The Collector-General's office also did an analytical study. I do not think as a result of these exercises we have come to the conclusion that there is any serious issue here. We are getting small numbers of cases where we suspect that there may be conversion. For example, the large cases division is taking four cases to appeal on the basis of suspicion that there may be conversion from income to gain. We have examined a lot of cases during the period of July 2005 to November 2006 in some of the other regions and there is nothing significant emerging. The real areas where we might have a worry would be if there was a property developer who was trying to characterise the sale of a property as a one-off transaction rather than a business or a trading and cash-rich companies trying to extract cash from the company by possibly a sale to relatives or connected persons or such like. In that particular case which is referred to in the Comptroller and Auditor General's report, we changed the law over the past two years to close down the possibility of this. We do not have any great evidence of this practice but we are very conscious of the temptation of the ongoing 20%.
Deputy Boyle: Will Mr. Daly refer to the other recommendations made by the Comptroller and Auditor General in his report about cross-checking for information and the differing standards that seem to apply in respect of clearance certificates and the lack of sufficient cross-checking with stamp duty returns? I refer to property transactions and whether the tax paid by the buyer tallies with the tax paid by the vendor.
Mr. Daly: Three areas are involved. An ST21 declaration is the declaration of stamp duty; a CGT50 is the clearance on capital gains; and there is the ordinary CGT return which is eventually made. It is obvious we should be matching all of these. There are timing differences involved. The CGT50 is not required in all cases and is not required in cases under the value of €500,000. The key to all this is our new risk analysis system and database where all this information is now being fed in and matched. This gives us a much better handle than we had in the past. There will be systematic matching of this information and it has already started.
Deputy Boyle: Is that the data warehouse? Where does that stand now? I believe it is still evolving.
Mr. Daly: It was a pilot for early this year and some of last year and it has now been rolled out nation-wide so it is in operation and will be used to identify cases and risk for 2007. It will be a significant factor in driving our audit selection for the coming year of 2007. It is populated with a lot of data and will continue to be populated with more, including the stamp duty data, the CG50 data and other information relating to assets and the sale and disposal of assets.
Deputy Boyle: Is there a correlation between the growth in capital gains tax and the growth in stamp duty returns?
Mr. Daly: I am not sure what the factor is but they are the two areas that have grown significantly in the past couple of years in terms of revenue yield. The surplus or outturn for this year shows that capital gains tax, stamp duty and, to a lesser extent, some other taxes, account for a significant part of that surplus. There is a correlation.
Deputy Boyle: When it comes to forecasting next year's anticipated receipts, do the Revenue Commissioners undertake an examination of likely trends in the property market and whether yields would be affected in the coming years?
Mr. Daly: We do, as we did last year around this time. We take account, in conjunction with our colleagues in the Department of Finance, of all the data that is in the market, such as microdata-specific comments that might be coming from experts, economists and people in the property market. As we said at the last meeting, forecasting is not an exact science and tax estimates are a factor of both the level and mix of economic activity. In good faith we take every piece of data available at the point in time when the forecast is being done. We have already done much of this in terms of 2007. In so far as the forecast may be out of kilter with the outturn, that is a result of the extraordinary developments in the economy during the year. I think I said last week everybody this time last year was expecting the property and construction area to, if not quite collapse, certainly to slow down. This did not happen.
From the point of view of the Revenue - it is also what I hear from the professional sector - in all of the tax growth last year there is probably a compliance effect because the Revenue's profile of tax compliance, investigations and effectiveness has improved in recent years, although this is difficult to quantify.
