Ciarán Lynch (Cork South Central, Labour)
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Question 78: To ask the Minister for Finance if he is satisfied that the letter from the Revenue Commissioners regarding the Department of Social Protection weekly pension was not, as reported, sent to persons who have no liability for additional taxation; and if he will make a statement on the matter. [1724/12]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 81: To ask the Minister for Finance the date on which he was made aware by the Revenue Commissioners of their intention to target a compliance campaign at persons in receipt of a State pension and a private occupational pension; the estimate of the amount of money he expects to be raised from the initiative; and if he will make a statement on the matter. [1784/12]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 82: To ask the Minister for Finance the way the figure of €45 million in 2012 and €50 million in a full year, and which appears in the summary of budget measures document published with budget 2012, was arrived at as an estimate of the revenue to be raised from various tax enforcement and compliance initiatives to be undertaken by the Revenue; if he will provide a breakdown of this amount; and if he will make a statement on the matter. [1785/12]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 83: To ask the Minister for Finance if it is his intention that the Revenue should pursue back payments of tax due from pensioners who are in receipt of a State social welfare pension and a private occupational pension, and who are the subject of the current compliance initiative by the Revenue; and if he will make a statement on the matter. [1786/12]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 78 and 81 to 83, inclusive, together.

I am advised by the Revenue Commissioners that in September 2011, under the auspices of a High Level Group of officials charged with ensuring ever closer working between the Department of Social Protection and Revenue, work commenced on looking afresh at data holdings in both organisations which had not previously been exchanged and which, with improvements in technology, could now be exchanged.

Subsequently, under its existing data exchange arrangements with the Department of Social Protection, information relating to long-term social welfare recipients was received by the Commissioners in late November 2011. This consisted of some 560,000 records relating to the State Pension, the Transition Pension, Widows/Widowers/Surviving Civil Partner's Pension and Invalidity Pension.

At the end of November, Revenue advised my Department that the aggregate amount of additional tax likely to be collected from this and other compliance activities with DSP was material in the context of the Budget with a view to my Department factoring it in to the Budget arithmetic. This is a normal part of the interaction between my Department and the Commissioners and is what every Government has always expected from them. On the basis of discussions between officials, it was estimated that it would be appropriate to factor into the Budget figures some €55 million in additional income tax in a full year. This estimate was arrived at on the basis of Revenue's view that some €300 million of previously untaxed income had been identified from the data exchange referred to above. It also took account of a previous data exchange in relation to lone parents' payments.

It must be emphasised that Revenue was not, and still is not, in a position to analyse the cases in question individually. Having regard to the profile of the population to whom the data relates, in arriving at the Budget estimate, a prudent view was taken of the likely effective tax rate which might apply and of the possibility that not all tax credits and other tax reliefs might have been claimed by those affected.

Revenue has carried out a high level analysis of the records received from the Department of Social Protection in November 2011 and has matched them with Revenue's own records. Following this exercise, it transpired that in approximately one quarter of the cases - 150,000 - the amounts of income on record did not match for a variety of reasons – some were paying too much tax, others were paying too little. A large proportion of this group of 150,000 cases had not reported their DSP pension to Revenue as they are required to do, and had been advised to do, by the Department of Social Protection when they were first awarded the pension in question.

In some 15,000 cases, and these are the cases which have caused the most confusion, the taxpayers involved had not reported their DSP pension to Revenue but it appeared to Revenue that, if there were no other unreported sources of income, they were most likely exempt from tax. Revenue wrote to those taxpayers indicating that there could be a temporary impact on their salary/occupational pension but that they would shortly issue a new Tax Credit Certificate which reflects the fact that they are exempt from tax.

I am advised by Revenue that in these 15,000 cases, the appropriate new Tax Credit Certificates will issue within a number of weeks.

Apart from these cases, based on the information available on Revenue's records and that received from the Department of Social Protection, Revenue have very little evidence that letters were issued to taxpayers who have no additional tax liability. However, individual taxpayers are now approaching Revenue to correct their tax records and it may, indeed, be the case, depending on individual circumstances, that no additional tax liability will arise in some cases. If the Deputy is aware of such cases, he may wish to bring them to the attention of the Commissioners so that the necessary adjustments may be made.

The Revenue Commissioners have accepted that the communications strategy could have been handled better in this instance, in particular if they had more time before the start of the tax year to inform the persons affected that additional tax would be deducted from their occupational pensions once those pensions started to be paid in 2012. The Commissioners overarching objective was to ensure that the taxpayers involved paid the right amount of tax at the right time for 2012 and beyond, and I support that objective. Otherwise, arrears of tax for 2012 would have quickly built up in the early part of 2012. These arrears would then have had to be collected at a very much higher rate later in 2012 had this exercise not begun at the start of the tax year. By acting early and adjusting tax certificates at the start of the tax year Revenue's aim was to spread the payment of the additional tax evenly throughout the tax year.

Revenue has a job do to administer the tax system fairly and efficiently. Government policy encourages exchange of information to support smarter working and it also supports fairness in the tax system. In fairness to the vast majority of taxpayers, including pensioners, who fully pay their taxes and who make full information available to Revenue in good time to allow for the correct calculation of tax liabilities, the information received from the Department of Social Protection had to be acted on by Revenue and, for the reasons already set out, had to be acted on quickly in order to ensure the orderly deduction of the correct tax payments from the occupational pensions of those affected from the start of the 2012 tax year.

Revenue has advised me that, as respects the information received from the Department of Social Protection, they are not carrying out a wide scale arrears programme on the basis that any such wide scale programme would be unfocussed and unlikely to be cost effective. In accordance with Revenue's normal practice, I expect and believe that Revenue will deal with the question of tax arrears, for those cases that actually have arrears, on the basis of a full and detailed risk analysis of the data and will target those cases where there is every likelihood of material amounts of extra tax being collected. Some cases will be uneconomic to pursue having regard to the resources available to Revenue, the cost of collection compared with the amount that may be recovered and having regard to the other tasks that Revenue must do in order to ensure that the necessary taxes and duties are collected for the Exchequer and that adequate border controls are maintained. Some cases relate to very recent pensioners so the question of arrears will not arise at all. I expect that the issue of arrears will not arise for a large proportion of the cases.

Revenue has a good track record in managing large projects in a sensible way while at the same time collecting the tax that the State needs and I am confident that they will on this occasion also.