Dáil debates

Tuesday, 20 March 2007

4:00 pm

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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Question 91: To ask the Minister for Finance the amount collected to date by the Revenue Commissioners through special investigations; and if he will make a statement on the matter. [10230/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that to the end of February 2007 they have recovered €2.297 billion from 31,950 taxpayers as a result of their programme of special investigations. The three major legacy investigations relating to bogus non-resident accounts, offshore accounts and single premium insurance products, account for the bulk of the amount recovered. The balance is accounted for by recoveries related to the Ansbacher investigation, the NIB-CMI scheme and tribunal related enquiries.

All Revenue's special investigations are now at an advanced stage and some are nearing an end. The follow-up phase of the bogus non-resident investigation is almost complete and the follow-up phases of the offshore and single premium insurance products investigations are well under way. The inquiry letter phase of the offshore investigation, which follows up those who did not make voluntary disclosures, started in 2006 and is expected to continue into 2008. The inquiry letter phase of the single premium investigation, which similarly follows up those who did not make voluntary disclosures, is scheduled to start at the end of this month and will involve the issue of approximately 5,000 inquiry letters initially.

Tax, interest and penalties continue to be collected as the investigations progress and this will be the position for some time to come.

The Revenue Commissioners inform me that these investigations have been very successful, not just in recovering outstanding taxes but in improving tax compliance in general in this country. The overall approach has been very effective and in some cases is being adopted by other revenue administrations. The powers of access, through the High Court, to financial information and, in particular, the powers provided in the Finance Act 1999 have proved to be of vital importance enabling Revenue to identify taxpayers with undeclared liabilities who did not come forward during the voluntary phases of the investigations.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I thank the Minister for his response. Following these successes of the Revenue Commissioners, does he agree that the statement of the former Minister, Mr. McCreevy, that there were no pots of gold with regard to unpaid taxes, was untrue? There was always a special situation for particular people who were not subject to the same tax regime as the PAYE sector. I congratulate the Revenue Commissioners on pursuing the issue of unpaid taxes.

How many court orders or court cases have the Revenue Commissioners taken to gain access to financial information to help them pursue these cases? Are the Revenue Commissioners able to pursue the issue of credit card accounts held offshore that allow some individuals to pay for off-shore purchases? How many cases have raised issues relating to inheritance tax arising as a result of the pursuit of various tax avoidance or evasion schemes?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not have the details on inheritance tax or credit card issues in this regard as that information is not available to me. I will find out whether the information is available. These issues arise as a result of non-compliance by taxpayers, whether PAYE or non-PAYE taxpayers, in respect of undeclared income that may have been moved offshore, used in single premium policies, resulted from bogus non-resident accounts, the result of deposit interest retention tax audits or arise from other issues that come up in tribunals or as a result of NIB or Ansbacher issues. These cases are being pursued on the basis of non-compliance. Some 31,950 taxpayers are involved out of a total of 2 million taxpayers. Of course, even one is one too many.

The recent annual report of the Revenue Commissioners stated that the level of tax arrears is about 2%, which in international taxation terms is a good indication of a far more compliant culture being in place than may have been the case in the past on account of non-compliance by individual taxpayers or the failure of the system to be sufficiently efficient or timely in ensuring it dealt with issues as they arose.

On the question of the process of obtaining High Court orders to access financial information to support investigations, I am advised that in the case of the bogus non-resident account investigation 18 High Court orders were granted and no further applications for High Court orders are anticipated as the investigation is almost finished. In the case of the offshore accounts investigation and the single premium insurance products, 21 High Court orders were sought and granted. It is expected a further eight applications may be required.

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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Does the Minister have figures available as to the sums recovered as a result of special investigations by the Revenue Commissioners in 2006 into the construction industry? With regard to the Minister's role in asking the Revenue Commissioners to undertake particular special investigations, section 881 of the Taxes Consolidation Act makes it a crime to evade taxes knowingly and this has a retrospective application. The Minister recently closed a number of loopholes with regard to stamp duties, one relating to the use of shelf companies and another relating to setting up third parties in the sale of properties. Is it not in order that special investigations should be taken into these areas to see how much was lost to the State by allowing these evasion measures to take place?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I an not so sure whether they were evasion or avoidance schemes. As the Deputy knows, avoidance schemes are not subject to recovery, but evasion is illegal and is subject to recovery in any circumstances and in any area of taxation. These matters are proceeded upon by the Revenue Commissioners. With regard to any issues they have sought to pursue, I have facilitated them either by way of legislation or administrative arrangement.

I do not have details of recently commenced inquiries into the construction industry which commenced during the course of 2006. Of the special investigations mentioned DIRT audits yielded €225 million, bogus non-resident accounts €627.2 million, off-shore assets €856.2 million, single premium policies €422 million, Ansbacher €68.4 million, NIB-Clerical Medical Insurance €59 million and tribunals €39.4 million giving a total of €2,297.1 million to date.

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Does the Minister have any idea of the number of investigations carried out by the Revenue Commissioners in 2006 into the veracity of claims by certain individuals to be non-resident for tax purposes? Is he satisfied the Revenue Commissioners have sufficient resources to monitor and assess new and developing means of tax evasion that some fly players in the financial sector might occasionally promote?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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As I said during the course of the Finance Bill debate all the criteria for non-residency are in line with international arrangements. The Revenue Commissioners monitor them in a way they do not disclose, in order to be able to carry out that monitoring. They are satisfied the people concerned are compliant.

Breeda Moynihan-Cronin (Kerry South, Labour)
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Question 92: To ask the Minister for Finance the tax incentive measures he will introduce to ensure Ireland meets the new target agreed by EU leaders of cutting CO2 emissions by 20% by 2020; and if he will make a statement on the matter. [10244/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The recent European Council set ambitious targets, in the context of climate change, for the reduction of CO2 emissions by 20% by 2020 for the European Community compared with the 1990 levels. The Council also endorsed a binding target of a 20% share of renewable energy in overall EU energy consumption by 2020 and a 10% binding minimum target to be achieved by all member states for the share of bio-fuels in overall EU transport petrol and diesel consumption by 2020, to be introduced in a cost-efficient way.

The Government recently published a White Paper entitled Delivering a Sustainable Energy Future for Ireland and a bioenergy action plan for Ireland. It is also preparing a new climate change strategy. In the White Paper, it has made clear that renewable energy will be a critical and growing component of Irish energy supply to 2020 and beyond. Renewable energy is an integral part of our climate change strategy and sustainability objectives. The additional diversity which renewables bring to Ireland's energy demand will also make a direct contribution to our goal of ensuring secure and reliable energy supplies.

The White Paper, and the bioenergy action plan, outline a range of measures to incentivise the development and deployment of renewable sources of energy. It sets very ambitious targets for expanding the role of renewable energy, most notably the target of 15% of electricity consumption to come from renewable resources by 2010 and 33% by 2020; a minimum target of 5% market penetration of renewables in the heat market by 2010 and 12% by 2020. The Government has also accepted the EU target of 5.75% bio-fuels market penetration by 2010 and at least 10% for 2020.

Additional information not given on the floor of the House.

While the promotion of renewable energy, including bio-fuels, is primarily a matter for my colleague, the Minister for Communications, Marine and Natural Resources, the taxation system, in conjunction with other policy measures, can play a part in attaining environmental objectives including the development and deployment of renewable sources of energy, including bio-fuels. In this regard the taxation measures which are already in place or are being introduced include a five year excise relief scheme for bio-fuels, costing over €200 million, which commenced in November 2006. The scheme provides for excise relief on up to 163 million litres of bio-fuels per annum; 50% vehicle registration tax relief for hybrid vehicles, flexible fuel vehicles and electric vehicles; extending the qualifying period from 31 December 2006 to 31 December 2011 for the scheme of corporate tax relief for corporate equity investments in certain renewable energy generation projects such as solar, wind, hydro or biomass technology categories, which have been approved by the Minister for Communications, Marine and Natural Resources; and extending to 31 December 2013 and enhancing the business expansion and seed capital schemes which can, among other manufacturing areas, be used for investment in companies engaged in renewable energy generation and recycling.

In addition, I announced in the budget the commencement of a public consultation process on adjusting VRT to take greater account of CO2 emissions of vehicles. My colleague, the Minister for the Environment, Heritage and Local Government, has undertaken a similar exercise. Any changes will have effect from a target date of 1 January 2008. My Department will also examine, in the context of the preparations for budget 2008, the case for disallowing, totally or in part, capital allowances and leasing expenses for high CO2 emission vehicles. Consultations will take place with the motor industry and the business sector as part of any review.

The overall level of excise relief available for bio-fuels under this scheme is that which the Minister for Communications, Marine and Natural Resources proposed in advance of budget 2006. It is regarded as a level which is sufficient to match Ireland's output potential for renewable energy crops for motor fuels over the coming years. These fiscal incentives were designed to kickstart the domestic bio-fuels industry and the evidence suggests that this is happening.

The Deputy might also wish to note there are additional non-fiscal measures that can be used to promote renewable energy, including bio-fuels, and reach the targets identified. In this regard to provide further market certainty and encourage projects of scale, the Government recently announced its intention to move to a bio-fuels obligation by 2009, with targets for market penetration for bio-fuels of 5.75% in 2009 and 10% by 2020.

The Government will examine other tax incentives or disincentives where these can be shown to have a clear cost-benefit in reducing CO2 emissions.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Is the Minister aware of the comments of his colleague the Minister for the Environment, Heritage and Local Government, Deputy Roche, that the Government was going to impose an additional tax on traditional light bulbs? Is the Minister for the Environment, Heritage and Local Government correct in saying that? What details of this additional tax has he worked out with the Minister for Finance and when is the proposed tax to be implemented? Is the Minister aware that currently the cost differential between energy efficient light bulbs and the traditional incandescent light bulb is sometimes up to a factor of ten? What plans does the Minister for Finance have to tax standard light bulbs?

What does the Government propose to do for people, such as pensioners, for whom the energy saving light bulb is extremely expensive compared with the traditional bulb? Is the Minister going to push the price of the traditional light bulb up to €6 or €12, the price of the energy saving light bulb in most shops?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Minister for the Environment, Heritage and Local Government has been indicating some of the proposals he will bring to Government in his climate change strategy.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Has he not told the Minister about this tax? He announced it.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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May I make the point?

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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He received a great deal of publicity on announcing it.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Does the Deputy want an answer at all?

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I do. I am dying to hear it. I would love for the other Minister to be here too.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will find if she is ever in Government which hopefully will not be soon, that ministerial pronouncements that require taxation measures also require Government approval and decision. We will deal with that as soon as the paperwork becomes available.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Minister for Finance did not hear about it. The Minister for the Environment, Heritage and Local Government did not even send him a note.