Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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22. To ask the Minister for Finance the reason for the lower than expected tax returns in view of the rising employment figures over the past number of years; and if he will make a statement on the matter. [31472/17]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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60. To ask the Minister for Finance the reason for the lower than expected tax returns in view of the rise of employment over the past number of years; and if he will make a statement on the matter. [31476/17]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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There is much speculation on the mystery of why income tax returns are coming in lower than projected. I put it to the Minister that the reason for this is because of the extent of precarious work, low-paid work and, something that has not been mentioned enough in this regard, bogus self-employment, particularly in the construction industry.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 22 and 60 together.

Given overall tax performance, I assume the Deputy is referring to income tax, which has performed steadily in the first six months of 2017.  It is up 3.1% or €274 million on the same period last year. However, income tax receipts of €9,045 million, or just over €9 billion, were slightly behind profile, down 2.3% or €214 million. Those are the year-to-date figures. This shortfall against target is across a range of income tax components.

 Income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. Some of these components are having a drag on overall income tax receipts in the first half of this year. 

The key component, PAYE income tax, which accounts for around 65% of total income tax receipts, was broadly in line with profile at the end of June. It is down 0.8%, which is €51 million.  This indicates an annual growth of 7.7%, or €462 million, versus a year ago.    

Notwithstanding this, the performance of USC was lower than originally expected at the end of June, with receipts down 4.8%, or €83 million below target, and officials from my Department and the Revenue Commissioners have been looking into this.  As part of my review, my Department and Revenue have re-examined the budget 2017 USC costings and we are satisfied that they are as accurate as possible given the complexities involved in forecasting. 

Furthermore, as part of the continuous efforts to improve the Department's tax forecasting performance, the ESRI and my Department jointly examined the sensitivity of income tax and USC revenues to changes in income. As a result of this work, which was published in March of this year, the Department has revised the income tax and USC revenue elasticities used in the forecasting process. These new elasticities were and will be used in the forecasts for 2018 and subsequent years in the 2017 stability programme update, which is published in April.   However, it should be noted that a back-casting using the revised elasticities would obviously imply a lower USC forecast for this year.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Nonetheless, €214 million is a significant shortfall, with €51 million of that from income tax. I particularly want to concentrate on the issue of precarious working conditions and, specifically bogus self-employment. There are now approximately 140,000 people working in construction. There is talk about how construction work is gathering momentum. I got another call in a series of phone calls I have had over recent years from building workers about the regeneration of Dolphin House and Fatima Mansions. Purcell Construction is the main developer down there. Rapid Developments is the bricklaying subcontractor. This is a firm that has had a lot of State contracts. It built St. Patrick's College in Maynooth and there were similar issues there. It is very similar to Rhatigans in that it has men taken on seven or eight weeks beforehand who are employed on PAYE but have not heard a word from Revenue. When they telephone Revenue to ask if they are in the system, Revenue states that it has not heard a thing about it. This is still rampant in the construction sector. If it was done properly and if they were on PAYE, the State would be getting very significant extra income tax revenues.

Paschal Donohoe (Dublin Central, Fine Gael)
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I had hoped that in the Deputy's supplementary question to me there would be an acknowledgement that in the figures produced yesterday, which looked at the half year, we have seen an improvement in many of the tax heads versus where we were last year and versus the targets that we have for this year. In particular, in June we saw a number of the tax heads that are particularly important in paying for our public services this year post a better performance.

With regard to the specific matters and companies the Deputy has raised with me, I am sure that the Revenue Commissioners get back promptly to queries that are raised with them. I am sure that upon the Deputy raising these points in the Dáil, these matters will gain further public attention. We have bodies whose job it is to enforce employment standards in construction and elsewhere. To answer the Deputy's question very broadly, if we look at the number of people who are classified as part-time and under employment, that has actually fallen by 6.4% in the first three months of this year. We are seeing increases in employment across the economy and increases in average earnings per hour and per week in all of the figures that we have available for 2017. The CSO is indicating a different overall picture to what the Deputy is indicating.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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There are 220,000 to 230,000 people who are classified as self-employed with no paid employees. I put it to the Minister, as construction workers and others in this House have been putting it to him for a long time, that the reason for that, particularly in construction, is bogus self-employment. One of the workers I mentioned is a labourer. When he telephoned Revenue to ask if he was down on the PAYE system, because his employer said he was taken on as a PAYE worker, he was told that he had probably been classified as self-employed. He is a labourer. How could he be self-employed? It is ridiculous. This is rampant in construction. From a tax point of view, if we look at 2008, for example, when there was 126,000 self-employed relevant contracts tax, RCT, workers, there was a minus figure in tax revenue of €67 million. This tax head loses money in many cases or gives no tax revenue compared to similar numbers of PAYE workers who brought in €700 million in tax revenue in that year. Is the same thing going on now. Is the Minister looking into it seriously to investigate these kinds of abuses?

Paschal Donohoe (Dublin Central, Fine Gael)
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Over the last number of weeks that I have been in this role, the Revenue Commissioners have not raised the matter with me to date. However, I will be meeting them directly in the coming days and will raise the matter with them to see if there is a cause for concern in the way the Deputy has outlined. As we know, the Revenue Commissioners impartially implement all the laws that we have around taxation. Alongside the Deputy's view regarding that issue, on which I will come back to the Deputy when I raise it with the Revenue Commissioners, let us also acknowledge that we are now at a point at which we have more than 2 million people back at work within our economy. I made the point to the Deputy earlier that if we look at all of the figures that are available from the CSO for 2017, they show an increase in earnings by week and by hour versus where we were a year ago.

It has shown that those increases are broad-based and that if one looks at the 13 sectors in our economy, one will see that earnings per hour have increased in nine of those sectors and earnings per week have increased in 11. It is a matter that I will raise directly with the Revenue Commissioners and if there is a point of concern on it, I will revert to Deputy Boyd Barrett.