Dáil debates

Tuesday, 21 February 2006

3:00 pm

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I want to raise with the Taoiseach the issue of tax incentives. Last week we discussed in the House the question of tax reliefs given on various schemes. They have cost €1.56 billion over the past five years. It is obvious that the cost of the reliefs was twice the value of the benefits enjoyed. Most of these reliefs went to a small number of high-earning individuals, some of them developers, some land owners. The point made was that the Government's failure to properly evaluate incentives and undertake a full cost-benefit analysis has cost Irish taxpayers hundreds of millions of euro.

That is in stark contrast to the treatment of hard-working PAYE workers in respect of unclaimed tax rebates. Deputy Bruton has been promoting this campaign for several years. Fine Gael highlighted a strong campaign last year on this and the results were startling. In 2003 €185 million was paid back to 230,000 workers. Last year the figure rose to more than €300 million in respect of 386,000 workers and that is still a long way from tackling the overpayments due. It is estimated that in respect of medical expenses, bin charges and private rents, more than 60% of refunds are not claimed. In these three areas alone at least €250 million would be paid back to PAYE workers, were these claimed.

Why is there no really strong public information campaign in respect of the rights of PAYE workers and the simplicity that should be involved in making claims? If 60% greater compliance was due to the Revenue Commissioners, an all out attack would be made to secure the outstanding moneys. However, when the boot is on the other foot, the Government is inclined to sit back and just let this happen. I know it is the responsibility of each taxpayer to claim back what he or she is due. Many of them may not be aware of their entitlements, however. In that sense the Government should run a strong information campaign for PAYE workers. In those three areas alone, medical expenses, private rents and bin charges, more than €250 million is outstanding. Perhaps the Taoiseach might give this matter some thought.

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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Targeted campaigns work. Last year in the case of the nursing homes, the Tánaiste highlighted the situation and there was an enormous take-up. On a number of occasions in recent years we have pointed to areas where reliefs could be availed of. It was done on the water rates issue and there was a significant take-up on that. I have no problem, in conjunction with the Department of Finance and the Revenue Commissioners, promoting a campaign to highlight the situation for PAYE people.

Most years the Revenue sends out brochures on people's rights along with P60s. There is also a tax charter on individual rights which it has enhanced in recent years. However, I will certainly take up with the Minister for Finance the matter of reliefs such as medical expenses which are not availed of, if that is what the Deputy is asking. These are moneys that are due to individuals under the laws passed in the House and provision is made for them. People have a right to claim these tax credits. If it is a case of highlighting them, as the VHI and other organisations do, we can get Revenue to run a more co-ordinated campaign. I have no problem with that.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I wish to make a few suggestions to the Taoiseach in the interest of simplicity and greater effectiveness. Relief for medical expenses does not include routine dental and optical treatment, or the first €125 spent by an individual or €250 by a family in respect of medical expenses. Those restrictions only add to the difficulty people have in making claims. Perhaps if these restrictions were removed we could implement a simple system whereby claimants would sign at the time of payment a simple tax relief claim for return to Revenue.

A number of other simple changes could be made, such as a reduction in the threshold for relief on charitable donations to €100, the look-back period for claims could be increased from four to six years, the cap on relief for bin charges could be removed, in addition to the removal of tax relief on routine dental and optical treatment and the removal of the non-qualifying amount. This would make the system far more streamlined and effective and it would be easier for PAYE taxpayers to claim back these reliefs from Revenue.

I thank the Taoiseach for agreeing to run a campaign on this matter and offer him these four suggestions that would make the system more effective and streamlined for PAYE workers to claim back their tax relief. These amendments will be tabled by Deputy Bruton on the Finance Bill which is on Committee Stage. The Government should consent to these changes which would not cost a great deal and would be in the interests of 500,000 taxpayers.

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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A number of amendments will be discussed on Committee Stage of the Finance Bill, today, tomorrow and on Thursday. I cannot give any commitments to change any of the thresholds, as these will be discussed by the committee. A threshold was brought in some years ago for charitable donations. In fairness, there never was a tax allowance for this area previously. It was introduced to help charitable organisations and NGOs. Reliefs and thresholds relating to bin charges were introduced to help with the collection process by making people more compliant in paying to use the system. In so doing, we are giving relief to the ordinary compliant taxpayer.

Regarding the thresholds introduced in the case of medical expenses, the aim was to give relief, not to pay the entire bill. Significant tax relief is provided, which is a considerable help and alleviation of the burden, especially for those with very high medical expenses. The Minister for Finance is dealing with these issues on Committee Stage of the Finance Bill.

I will raise the issue of mounting a campaign targeted at reliefs, which form part of tax law, and when people are entitled to receive such refunds in a way that would improve the take-up of people getting back their entitlements. This is something we can do.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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With the Ceann Comhairle's permission, I will continue this theme. Is the Taoiseach aware that on Committee Stage of the Finance Bill today, the Minister has conceded that some 400,000 taxpayers out of a workforce of 2 million have not received their tax allowance and credit certificates yet? More than two months after budget day, the tax certificates for 20% of the workforce are late and have not issued yet.

The Taoiseach may be aware that all of us who are fortunate to be employed by the Houses of the Oireachtas got a communication today from the salaries unit of the personnel section of the Houses of the Oireachtas which advises:

Please be aware that an error has been encountered on the new Revenue System which has resulted in people both underpaying and overpaying tax. . . The Salaries Unit have intervened where they have discovered large discrepancies on tax certs which have issued and on the advice of the Revenue Commissioners have reverted staff to last years credits. . .

It goes on to explain the problem is in the Revenue system, not in the Houses of the Oireachtas. It would appear the Tánaiste is not the only one suffering this type of fault and incompetence.

How can it be justified that two and a half months after the budget that the tax certificates for 400,000 compliant taxpayers are late? A child care decision was announced on 7 December that cannot be implemented until August. Changes in the tax system that were to apply from 1 January have not been implemented yet. Tax certificates have not been issued yet. Social welfare changes were announced. The Minister published the Bill yesterday and purports to start the debate on it in the House today. What kind of incompetence is this and will the Taoiseach indicate how serious is the problem identified by the salaries unit of the personnel section in the Houses of the Oireachtas in the new Revenue system that has resulted in both underpaying and overpaying of tax?

If the underpayment or overpayment is large, people will notice it and act on it, but the problem lies with instances where the error is minor, as most people only check the bottom line. As we have seen from the figures supplied by Deputy Kenny in a different instance of under-claiming of entitlements, most people do not look at minor discrepancies. Is it the case that these minor discrepancies will continue for the rest of the year?

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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I am aware of the late arrival of tax certificates. The Minister has given a report on this today to the Select Committee on Finance and the Public Service. I am not aware of the underpayment-overpayment of tax by those on the Houses of the Oireachtas payroll. I will ask the Department of Finance to check this.

The new child care scheme which we have introduced will be ready by the due date, as I said in the House two weeks ago. A report suggested it was way behind schedule but my information is that it is on schedule. I am not aware of any major problem in Revenue. It usually takes them some time to issue all of their certificates. Revenue's computerised system is credited as being among the best and most efficient, not only here but abroad. They are well recognised for this.

In reply to Deputy Rabbitte's question on the Houses of the Oireachtas payroll issue, it has not been brought to my attention but I will ask the Department of Finance to check it.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Many people around the country hope the Taoiseach is right, that Revenue's computer system is the best and most advanced. My perception of the efficacy of the Revenue Commissioners is that they have improved greatly in recent times but when one looks at this kind of statement from our own employer and the fact that 20% of the workforce have not received their tax certificates, one wonders what is giving rise to these problems.

If one looks at any of the reliefs to which Deputy Kenny referred, for example, the relief on trade union subscriptions, the last figures available date to 2002 when it was indicated that 229,000 claims were made. There are somewhere between 650,000 and 700,000 trade unionists in the country. Medical expenses are similarly under-claimed. As head of Government, is there not a case for the Taoiseach committing to some kind of public information campaign that would advise people of their rights and entitlements? We can wake up to public service broadcasts telling us we must get our tax returns in by Friday. Why can similar broadcasts and public information campaigns not be produced which would advise people about their entitlements and what they can claim? It is clear that there is no such public service information when it comes to tax reliefs in minor areas for those on lower incomes — people in the PAYE net — unlike the kind of property tax-based incentives we spoke about last week. We cannot just brush aside the fact that tax certificates have not been issued two and a half months after the budget and the question mark over their accuracy, particularly in the case to which I referred.

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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The Revenue Commissioners do not exhort individuals to avail of the artists exemption tax relief scheme or other property-based tax reliefs under section 23 of the Taxes Consolidation Act 1997. It is solicitors and accountants who discover where tax reliefs exist and produce promotional literature on the night of, and the morning after, the budget. It is also untrue to say that no information exists about the tax reliefs people can obtain in respect of medical expenses, VHI, water tax or trade union subscriptions.

Following the last budget, the tax rate for a person on the average industrial wage is now 12 percentage points lower than it was a few years ago — it is now 15% compared to 27% a few years ago. Given that tax rates are not as high as they once were as a result of the tax policies of this Government, people do not see that. I have stated that I will take up this point. Comhairle and the citizens' information centres highlight the tax reliefs that exist. I accept that this work is possibly not as high profile as it should be. The Minister has issued the report into why the full tax certificates were not given to 2,000 out of the 1 million or so people who are income earners. Approximately 750,000 of these earners are now exempt from tax.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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I am concerned about how easily the phrase "water tax" slipped off the Taoiseach's tongue. I hope it was not a Freudian slip. The Minister of State at the Department of Health and Children, Deputy Tim O'Malley, with the support of the Tánaiste and Minister for Health and Children, announced that the buildings and land around all or most of the 15 psychiatric hospitals are to be sold. The intention is clearly to transfer this invaluable public asset to developers who will seek to make yet another killing in land speculation, apartment development or the like. This follows the similar land sale mania of the Minister of State at the Department of Finance, Deputy Parlon, and the intention of the Tánaiste and Minister for Health and Children to facilitate a major privatisation in the health services through handing similar land around general hospitals to profit-seeking capitalists on considerable tax breaks from the Government, who will again seek to make significant profits out of human health and illness.

It appears that while Progressive Democrats Ministers sit on publicly owned assets in the Departments, they are like cats on a hot tin roof and cannot wait until they have flogged the assets to speculators and developers. All Independent Deputies in the Technical Group are extremely concerned about this departure. They speak with authority as health concerns played a very important role in the election of a number of them. Does the Taoiseach acknowledge the fear of many people, who are very concerned about the level of psychiatric care in this State, that the Progressive Democrats' rush to put the hospitals and land under the hammer will not be matched by a similar speed in providing the range of services urgently required by those needing psychiatric support services?

While it is agreed that the massive Victorian and Dickensian institutions do not represent the future for psychiatric care, does the Taoiseach not agree that these sites, which are publicly owned, should be seen as a major social and community asset rather than the subject of a quick property sale? Does he not agree that psychiatric services could be developed on these sites, taking account of modern conditions and ideas, and that other public medical services and services such as community and disability services could be developed as an alternative to simply getting rid of these sites and wondering what to do next? How far has this process gone and what has the Taoiseach approved in this regard?

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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The expert group on mental health policy has completed its work on the preparation of a new national policy framework for the future development of mental health services and its report has been published recently. The Health Act 2004 provided for the establishment of the Health Service Executive, which has responsibility for the management and delivery of health and personal social services, including mental health services. The report of the expert group concluded that the large, old institutional psychiatric hospitals should be phased out over the remainder of this decade and the early years of the next decade and that the resources freed up by the sale of these assets should be used to develop community-based mental health services rather than institutional services. The report recommended a transfer of resources from mental health institutions either directly into the community or into the development of acute psychiatric care facilities linked to national teaching hospitals.

That is the basis for the report. It has been recognised since the publication of Planning for the Future in the mid-1980s that it is far better to move away from highly populated institutional facilities towards smaller units in the community which are akin to residential housing units. This trend has led to the almost total depopulation of St. Brendan's Hospital in Grangegorman, which has been transformed into a combined third level education institute under the control of the Dublin Institute of Technology. There is a cost factor involved in such exchanges. An exchange of resources took place between the Departments of Health and Children and Education and Science. The aim is to build up proper community-based services for these patients in the future, which appears to be a very progressive way of dealing with people with mental illness.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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What is the degree of co-ordination between the various Departments in respect of these issues and the question of land sale? Is the Taoiseach aware that the Office of Public Works knew about the policy decision concerning psychiatric hospitals? The OPW has sought sites around the country for decentralised offices for public servants. Whether anybody will be found to fill them is a matter which we will leave for another day. Land prices in the regions have been driven up by the fact that the State is in the market for land. The Government has refused to take measures to control the price of land. Was there co-ordination between the OPW and the Department of Health and Children? Any one of the 15 sites might be suitable for developing community or State offices, or whatever is required for decentralisation.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy's time has concluded.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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What other investigation will take place to ascertain the community and other State services that could be located on these sites? In light of the Government's lamentable record on social housing, one could ask why an element of social housing could not be accommodated on these publicly owned sites? In many cases, these sites are located in areas which would be eminently suitable to social housing and other community services.

Photo of Bertie AhernBertie Ahern (Dublin Central, Fianna Fail)
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The work of the expert group on mental health policy has been completed and approved by the Government. It decided that the ten or 15 mental institutions around the country should be closed over the next five to seven years. The resources obtained should be transferred into the community and spent building a good and proper mental health service. This year we will spend approximately €800 million on mental health services but more resources will be required in order to develop the service within the community. The OPW is involved in all the property deals on behalf of the State. While issues may arise about its procurement policy for some other purpose, the State must realise the money to reinvest it in the service.

On the question of the availability of land, the Department of Health and Children has been one of the progressive Departments in handing over land to the State for the affordable housing initiative. Approximately 70 State-owned sites have been made available by a number of Departments to assist the affordable housing initiative. Approximately 1,100 of these houses have been completed. Approximately 2,000 will be built this year. Some of these involve land swaps so things can move more quickly. Others are going through the planning process.

More than €3 billion has been spent on social housing. Enormous sums of taxpayers' money is being spent on social housing. The recommendation of the expert group on mental health is to move these lands away from the old institutional arrangements and to develop quality community services for people suffering from mental illness.