Joe Costello (Dublin Central, Labour)

I thank Senator Kelly for his contribution. I apologise that the Minister for Finance is in the Dáil debating the Bretton Woods legislation. I have great sympathy for the person the Senator referred to and I will convey his remarks to the Minister for Finance.

The Senator will be aware that the Revenue Commissioners are responsible for the collection of the bulk of taxes and duties due to the Exchequer. Its focus is on making sure that every individual and business complies with the responsibility to pay the right amount of tax or duty due in full and on time. Delays in the collection of tax revenues confer an unfair competitive advantage on non-compliant businesses. Revenue approaches the task of securing the collection of the critical taxes and duties in an efficient manner.

It is of vital importance to the economy to have a tax system that is efficient and easy to comply with, that is responsive to the needs of the taxpayer and other stakeholders and encourages and actively promotes voluntary compliance. Internationally, Ireland is among those countries that make it easiest for taxpayers to pay their taxes. In the recently published report of the World Bank Group, Doing Business 2012, Ireland was ranked in fifth position worldwide.

Revenue has invested significant resources in developing its online service, or ROS as it is more commonly called. The service is rated extremely highly both in Ireland and internationally. It delivers a 24-hour year round service. It also enables faster processing times for Revenue and reduced compliance costs for business and taxpayers.

Even in the current difficult economic and financial environment for businesses it is essential that they maintain and organise their financial affairs to ensure that tax debts are paid as they fall due. Revenue will not allow businesses to continue to trade if there is no capacity to meet tax debts as they arise into the future. To do otherwise would have a corrosive effect on our high, timely and voluntary compliance rates by businesses generally. Revenue encourages businesses and individuals experiencing payment difficulties to work proactively with it when difficulties arise. The purpose of this is to maximise the opportunity for an agreed approach to secure timely compliance and enable any possible tax debt to be cleared over a realistic timeframe. I welcome the fact that tax practitioners and trade representative bodies have recognised and supported Revenue's efforts in working with businesses to address tax payment difficulties.

A key feature of Revenue's approach to compliance and debt management is early intervention by its staff when payment and compliance problems arise. Sophisticated Revenue IT systems have been developed and refined to assist in the timely identification of cases for direct intervention on payment or returns compliance. The riskiest cases will be targeted first but there is a structured programme in place to ensure that all cases that are non-compliant in any form are examined and subject to appropriate intervention.

Permission from Revenue to pay a tax debt by a phased payment arrangement is a concession and must be justified to it by reference to the circumstances of each taxpayer or business. Every phased payment arrangement will include interest. Therefore, it can entail substantial additional financial costs for businesses but it is appropriate to ensure that compliant businesses are not disadvantaged. Accordingly, it is in the interest of a business or a taxpayer to minimise their exposure to interest by paying as much of the debt up-front and any balance over the shortest possible timescale.

Revenue is charged with the responsibility for collecting and securing the majority of the revenues required by the Government to fund State services. The majority of taxpayers and businesses readily fulfil their obligations to pay what is due and on time. Taxpayers and businesses can, and do, encounter cashflow problems but these must be addressed so that timely tax compliance is restored and assured. Addressing these problems, in consultation with Revenue, at the earliest opportunity is essential to avoid debt problems becoming insurmountable or where avoidable interest or enforcement costs are incurred.

With regard to the need for businesses to engage with Revenue, early positive and realistic engagement is necessary when tax compliance problems begin to emerge. Such an approach ensures that businesses maximise the opportunity of arriving at a successful and early resolution of compliance difficulties in a way that meets with Revenue's approval. Tardiness in recognising or addressing tax compliance problems merely serves to exacerbate the compliance challenge for businesses and taxpayers.