Kieran O'Donnell (Limerick East, Fine Gael)
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Question 182: To ask the Tánaiste and Minister for Finance the number and amounts of income tax repayments made by the Revenue Commissioners to PAYE earners for 2006 and to date in 2007; the system checks the Revenue Commissioners have in place to check the accuracy of tax credits and bands issued to PAYE earners; if the Revenue Commissioners have carried out an assessment of under claimed tax reliefs by PAYE earners; and if he will make a statement on the matter. [30017/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that the information requested in relation to repayments to PAYE taxpayers is that 663,837 repayments, amounting to €418 million, were made in 2006 and 748,222 repayments, amounting to €490 million, had been made in 2007 up to 16 November last. The repayments made in 2006 refer to the years 2002 to 2006, inclusive. The repayments made in 2007 refer to the years 2003 to 2007, inclusive.

The PAYE system is designed to collect, in so far as possible, an employee's correct liability to income tax during the year. This is achieved through a cumulative system where liability and reliefs are accumulated on a payday to payday basis. In this way, at any point in time during the course of the year, the amount of tax deducted from the employee should be appropriate to his or her earnings up to that point. In a large majority of cases the PAYE system collects the right amount of tax because people have claimed their due entitlements and employers have supplied income updates in their annual P35 returns. However, some claims, such as for medical expenses relief, can generally only be made after the end of the tax year. In relation to an assessment of underclaimed reliefs, the Revenue Commissioners can only allow reliefs and credits on the basis of the information that is known to them. Consequently, there is no way to accurately assess underclaimed entitlements where changes in individual circumstances have not been notified by the people concerned. However, in relation to the granting of credits and reliefs, the policy of the Revenue Commissioners is that, once claimed, the majority of these are generally carried forward automatically from year to year by the Revenue computer system.

The Revenue Commissioners also send out claim forms automatically in certain circumstances where a claim is considered likely, for example, Med 1 claim forms for medical expenses relief are automatically sent out where such a claim has been made in the previous year. In addition many of the more significant reliefs are now granted through the Tax Relief At Source arrangement. For example, mortgage interest relief and medical insurance relief are provided at source through the taxpayer obtaining a reduction in repayments or premiums equivalent to the tax relief. Recurring reliefs, like those for trade union subscriptions or bin charges, once claimed, are allowed on an ongoing basis and reappear each year in the taxpayer's certificate of tax credits. As announced in Budget 2007, Revenue are now granting age-related tax credits automatically where a verified date of birth can be established through Revenue and Social Welfare records. In addition, credit institutions have been enabled to operate DIRT-free accounts for those aged 65 and over and for those who are permanently incapacitated, where their income falls below the relevant income tax limits. Previously, both categories had to reclaim the DIRT paid. For 2008, Revenue plan to move to automatic repayment in respect of unreimbursed expenditure under the drugs refund scheme. Also in 2008, tax relief on medical insurance paid by employers (that has been subject to benefit-in-kind taxation) will be automatically included in the employee tax credit.