Charlie McCreevy (Kildare North, Fianna Fail)

This recommendation would require that all medical examinations undertaken by employees and directors other than proprietary directors or connected persons, paid for by a company, would not be subject to the new provisions regarding benefit in kind. The cost of providing medical check-ups which employees are obliged by their employers to undergo is not regarded as a taxable benefit, and is not liable to PAYE or PRSI. However, routine medical check-ups, paid for but not required by the employer, are treated as giving rise to a taxable benefit, and I do not plan to change this arrangement.

Regarding the application of PAYE and PRSI to benefits in January, this initiative is designed to ensure that on grounds of equity, employer remuneration in whatever form provided is treated similarly for tax, PRSI and levy purposes. The Senator's recommendation would in effect mean that employees who benefit from medical check-ups that are paid for by their employer, which are not required as part of their employment, are treated more favourably than those who pay for their own medical check-ups. In the circumstances, I cannot accept the recommendation.

Senator McDowell asked a question regarding BIKs and the new situation regarding how we apply tax in the particular areas. In December 2002, I announced that the new arrangement would be implemented from 1 January 2004 in order to allow time for employers and everyone else to get their affairs in order. In the latter quarter of 2003, after much consultation with the various bodies, I announced the publication of the details and regulations. Changes in this year's Bill reflect the consultations undertaken then, and I am not aware of any significant difficulties so far this year. From the time I published the methodology of computing last year, I made one significant change regarding vans in private usage. The other changes regarding the personal use of mobile phones and computers were in the changed regulations which I published.

The purpose here is to avoid employers remunerating their employees and escaping PRSI and PAYE. Some of the changes put the payment of tax on a different basis so that it is now deducted through the PAYE system. Some benefits in kind used to be paid by employees in arrears. For tax reasons, many employers were remunerating their employees by means of a method which would escape PRSI and PAYE. That is not fair to the generality of employees who do not have the wherewithal to use such methods. It is simpler to put everyone on an equal footing.

We left some significant items outside the PRSI net, namely share options. Attempting to include them was becoming so complicated that I abandoned hope. It is not currently a major issue, because share options last year were not the major consideration they were in previous times. I have tried to ensure that everyone pays PAYE and PRSI on the same basis. At the time of the budget in December 2003 I estimated that a figure of €83 million might be the benefit to the Exchequer of particular changes. We can assess that after 2004 to see if we got more or less than that figure.