Oireachtas Joint and Select Committees

Thursday, 5 May 2016

Committee on Housing and Homelessness

Minister for Finance

10:30 am

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael) | Oireachtas source

Vulture funds must comply with the law in exactly the same way as any other owners of loan books. The same protections apply to the mortgage holders or tenants under the new arrangement as applied under the old arrangement. That is the inhibition on them. The argument I am making is that the transfer to new ownership does not disadvantage or give new rights to vulture funds. They has the same rights and the same responsibilities as the previous owners. That is my point.

I agree with the Deputy that the model on building sites is changing. The primary builder is now more correctly described as a developer. By and large, they work out the project through subcontractors. As a consequence of this, many people who are skilled in the building industry are setting themselves up as subcontractors and have their own small businesses. That is just a change in the model and that is the way the world works. It is the way construction is working in all the major cities around the world and Dublin is no exception. If one visits building sites which have cranes on the skyline - which I have not done - I would be surprised if the work is not being carried out by quite a large number of subcontractors who come on site when their particular skillset is required to develop out the building. There is a tax issue but the Revenue Commissioners have been working very hard to modernise the relevant contracts tax, RCT, system to counter tax avoidance and evasion. The Revenue has been rolling out new electronic or e-RTC system. The Department of Finance and the Department of Social Protection have also been examining whether people employed in sectors such as construction should be regarded as subcontractors or employees. This is an issue that has been raised by the ICTU and it is under active consideration. There is no doubt that, as the model changes, an issue arises for Revenue. The issue in question relates to an individual working on a building site who is an employee and who decides to describe himself, with the collusion of his employer, as a subcontractor.

Then he is taxed as a subcontractor rather than an employee. That is tax evasion, which is a criminal offence. Revenue is addressing this. The issue was pretty bad two years ago, although activity was low. However, the problem is being cleaned up and we are giving Revenue all the resources and support it needs to deal with the problem.

The Deputy is correct to say there is a problem, but it is not a problem we or Revenue are closing our eyes to. I assume the Chairman will invite Revenue to attend these proceedings at some stage and its representatives can provide more details on this issue. It was a significant problem, but it is a lesser problem now. It remains a problem, but it is being addressed.

I think I have dealt with all the issues raised by the Deputy.

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