Michael D Higgins (Galway West, Labour)
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Question 64: To ask the Minister for Finance if he will report on the work of the RCT monitoring group; the number of audits that have been carried out to date in 2006 on construction companies; the number of site visits conducted by the Revenue Commissioners Office in 2006; the yield from these audits; the percentage of tax due from these audits that is to be collected; the number of contractors that have been re-classified as employees as a result of these audits; and if he will make a statement on the matter. [39225/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that the Relevant Contract Tax (RCT) Steering Group has made significant progress to date in 2006. As I have previously advised the House, the Revenue Commissioners have made a commitment to assigning 25% of its audit and compliance resources to the construction sector in 2006. In addition to this they launched a national construction project to be monitored by a central steering committee. Moreover substantial progress was made in relation to legislative changes, IT upgrades and administrative improvements.

As regards Legislative Changes, the steering group proposed a number of legislative changes that I introduced in the Finance Act 2006. These affect

applicants for C2 certificates,

principal contractors making payments gross to certified subcontractors, and,

subcontractors claiming repayment of RCT deducted by the principal contractor.

The scope of RCT insofar as it extends to all relevant contracts carried out in the State was also clarified. These legislative measures were aimed at tightening controls and discouraging fraud.

The Revenue Commissioners continue to increase its use of Information Technology to identify areas of risk in the construction sector. This is feeding into the audit, site visit and assurance check programmes e.g. information now captured on the Revenue Commissioners' systems is giving a good real time overview of RCT operations at principal or subcontractor level. This greatly enhances the ability to identify, target and focus in on areas/cases that may pose a risk.

Finally, as regards the administrative changes the Revenue Commissioners have introduced a number of administrative changes some of which are as follows:

A full time national C2 monitoring group has been established for the construction industry.

A Central Unit to Deal with Non Resident Contractors has been established

More site visits are being carried out.

Specific attention is being placed on ensuring the correct classification of all workers on the site as either self-employed sub contractors or employees

Revenue is monitoring all new C2 holders within 6 months of getting the C2 certificate.

Suitable cases are being identified for investigation with a view to prosecution

Materials now displayed in a number of different languages to reflect the changing composition of the workforce involved in construction

Revenue has engaged in an extensive information and educational programme with the industry and their advisors.

To turn to the Deputy's specific questions on the outcomes of construction activity in the year to date:

In relation to audits, there were 3,083 audits carried out on construction companies in the period to 31/10/2006. This in fact represented 29% of the total number of audits carried out by Revenue in that period.

In relation to Site Visits & Assurance Checks, there were 1,457 Site Visits carried out in the same period. In addition, 35,062 assurance checks were carried out.

The yield from these activities to 31/10/2006 is €126.6 million. As these figures relate to audits finalised and settled there is no further tax due in these cases.

In relation to reclassification of contractors, up to 31/10/2006,

411 subcontractors were reclassified as employees.

511 employees were identified who were not registered with the Revenue Commissioners;

490 self-employed subcontractors were identified as not being registered with the Revenue Commissioners

a total of 1,003 hidden economy cases.

1,974 additional taxes were registered. (These are cases that were not registered with the Revenue Commissioners for all the required taxes.) All this testifies to an intense and vigilant watch on the RCT sector, for good reasons.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 65: To ask the Minister for Finance if he will terminate tax breaks for the construction of private hospitals. [39113/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The scheme of capital allowances for the construction of private hospitals was reviewed by Indecon Economic Consultants as part of the overall review of property tax incentives in 2005. Indecon consulted widely in the course of their review, including consultations with the Department of Health and Children and the Health Service Executive. Their report was published on 6 February 2006 and is available on the Department of Finance's website. The review recommended that this scheme should continue as there was a need for on-going investment in private hospitals. The consultants observed that the construction of private hospitals could free beds in public hospitals used by private patients. It should also be noted that the consultants observed that the Government's plan for private hospitals in the grounds of public hospitals is designed to be a cost effective way of expanding supply and if properly managed will increase supply and competition.

The summary of the main findings from Indecon's analysis is as follows:

There has been an overall increase in planning applications and approvals for private hospitals since 2000 but most have not proceeded to date.

Most of the extra investment in the sector would either not have been undertaken, or would have taken longer to come on-line in the absence of the tax incentive scheme.

While it is too early to provide detailed estimates of the impact of the scheme on the supply and on the costs of hospital beds, Indecon believes the scheme has the potential to address supply shortages in the sector and to reduce costs.

In all of the circumstances, I have no plans at this time to terminate the scheme of capital allowances for the construction of private hospitals. Private health care is a long established feature of the system of health care provision in Ireland and acts as a strong complement to the publicly funded system. Private health care provision spans from general practitioner services through private beds in public hospitals and private hospitals to private nursing homes. The Government is committed to exploring fully the scope for the private sector to provide additional capacity in the health system. The key objective is to provide the required extra capacity, whether this is in the public or private sector. A number of Government policies-initiatives support the co-existence of public and private health care such as: the designation of private and semi-private beds in public hospitals; income tax relief on private health insurance premiums; income tax relief on medical-dental expenses; the National Treatment Purchase Fund sources capacity in private hospitals for public patients; and the policy direction of the Minister for Health and Children to the Health Service Executive to promote the co-location of private hospitals on public sites thereby freeing up beds for public patients.