Willie Penrose (Westmeath, Labour)
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Question 7: To ask the Minister for Finance the number of random audits carried out of the Revenue Commissioners in 2005; the way in which this compares with each year from 2002; the number expected to be undertaken during 2006; and if he will make a statement on the matter. [12390/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have been advised by the Revenue Commissioners that 411 cases were selected for random compliance testing as part of the 2005 programme. A detailed evaluation of the results will be finalised once the approximately 60 remaining audits are completed. I am informed that Revenue's approach to random compliance testing changed significantly in the 2005 programme and this should be borne in mind when making comparisons with previous years. The traditional random audit programme was not carried out in 2004 due to the change in Revenue's approach following a review of the programme. However, 25 cases selected under the programme for previous years were completed in 2004.

I understand that 274 random audits were completed in 2003 and 720 in 2002. However, the selection for these years was not purely random because revenue districts narrowed down the initial random selection based on risk criteria. I understand the sample size in the 2006 random compliance testing programme will again be in the region of 400, the same as for the 2005 programme.

The Revenue Commissioners assure me they are dealing in a determined way with tax evasion by maximising the impact of their resource deployment through focusing on risk. This is strengthened by the random compliance testing programme, which ensures that all taxpayers are exposed to the possibility of a compliance check or audit. This approach is in line with best international practice.

Joan Burton (Dublin West, Labour)
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In the record of year-end information on public servants and employment levels, the Revenue Commissioners are recorded as having 6,000 public servants last year and they are expected to continue with this number. There has been extraordinary success with the Ansbacher and DIRT inquiries etc. conducted by the Revenue Commissioners, which have to date, brought in more than €2 billion. This is despite the Minister's predecessor, Mr. Charlie McCreevy, on record stating that there was no pot of gold with regard to unpaid taxes. He was shown to be absolutely wrong.

Does the Minister accept, given that so many taxpayers file returns by self-assessment, that the number of random audits being carried out is way below what it should be if we compare it to the number in the United States, for example? Does the Minister accept that where people evade their proper taxes, despite most of our tax rates being quite low, the end result is to rob the health and education services of necessary funding to provide proper services?

Has the Minister any proposals to consider the resources allocated to the Revenue Commissioners with a view to expansion? This should be examined particularly in the context of what occurred last year with Gama and what has been disclosed this year with regard to various agency employers, which still appear to be able to fly below the radar of complying with tax and welfare obligations.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We have seen a great improvement in the compliance culture with regard to the tax administration system. The number of tax compliant citizens has greatly increased, with one of the reasons being the important changes brought about, particularly with regard to self-assessment for the self-employed. That has brought about a transformation which can be seen through the tax take obtained, in percentage terms, from self-employed people compared to the historical numbers.

In the 1970s and 1980s, when I first came into this House, one of the great problems was the huge estimates of tax liability suggested as being due. This was because the tax administration, if it had not quite come to a halt, was not working in a very effective or efficient way. That was even acknowledged by practitioners within the service itself, and we have seen a great transformation for the better. This has greatly enhanced public confidence in the taxation system. I acknowledge that the move away from punitive tax rates, which fostered a black and grey economy in the past, means that the vast majority of people are now in the system, working legally and meeting obligations.

There will always be a decreasing minority of people who do not meet their obligations fully and do not comply with tax Acts as they should. The Revenue Commissioners have been very effective in dealing with those matters. We have seen, through publication of defaulter lists, an effective mechanism that is a strong deterrent for people against taking risks of non-compliance with tax liabilities.

I take advice from the Revenue Commissioners on these matters, and they tell me the approach they take is in line with best international practice. They are continuously in consultation with other revenue organisations across the world, ensuring they have the most up to date technology and practices available to them to ensure they work effectively. Much congratulation is due to the management of the Revenue Commissioners, and the success of top management there has greatly improved the operation. Having spoken to the top management, I believe it to be a very well run organisation in the main.

Any justified request from the chairman of the Revenue Commissioners for extra staff is listened to with some seriousness by my Department. We should bear in mind our efforts to control public service numbers while recognising that front line staffing for important public services are not compromised. The chairman has made some requests in that regard and they are being processed in the normal way. Overall, we have much to be proud of in the way in which our revenue system works.

Richard Bruton (Dublin North Central, Fine Gael)
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I welcome the progress made in this area. There is an issue of proportionality. Under the Revenue powers group recommendations the Minister was to come in with some recommendations on the gradation of powers. This related to the powers moving from audit to investigation to prosecution, and that there would be some test of reasonableness along the route. Is that coming through?

Apropos of Revenue powers, it has been stated to me that as there is a new revenue power to look at bank accounts, it could potentially be used to check on SSIA holders to see if they borrowed money to keep up the SSIA payments, compromising their savings scheme and making the entire amount liable for tax. Can we be assured that these powers will always be used in a reasonable way and that this type of action could not come out of the woodwork in future?

Brian Cowen (Laois-Offaly, Fianna Fail)
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We can be assured that the powers will be used in a reasonable way and that the worries that some small account holders have on this matter are not well-founded. They are only to help with risk-based assessments, and it is only where the Revenue Commissioners see something which is obviously wrong in the context of other information that an investigation will occur.

Many of the Revenue powers group recommendations have been implemented, and they are often reviewed from year to year. Some recommendations were reviewed last year and some will be this year. I will have to check with my officials and update the Deputy on the power specifically referred to.