Eoghan Murphy (Dublin South East, Fine Gael)
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To ask the Minister for Finance if he has considered the merits or demerits of a tax initiative (details supplied). [55682/12]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy’s question, essentially, is whether everyone might be required to submit a tax return. The position is that in general, individuals whose income is taxed under the PAYE system are not required to submit a tax return annually because by and large it is not necessary. As the Deputy will be aware, the PAYE system successfully operates to deduct the correct amount of tax in a seamless way from the vast bulk of PAYE employees and pensioners, and their taxable income is reported to Revenue by the employer/pension provider after the end of the tax year. In addition, I am advised that the current practice of the Revenue Commissioners is to issue annual returns to specific groups of PAYE taxpayers whom they regard as potentially higher risk cases. To my mind, this is an efficient and appropriate approach to this matter. The alternative would require up to 2 million people to prepare and submit tax returns for no obvious benefit, and I would be concerned about the administrative and cost burden on both taxpayers and Revenue if the law was changed to make it mandatory for all PAYE employees to file an annual tax return.

Regarding State pensioners, I am advised by the Revenue Commissioners that the majority of taxpayers do report details of their State pension entitlements to Revenue, even though they are not obliged to file an annual tax return but, in any event, Revenue now receives information on pensions paid by the Department of Social Protection (DSP). This data exchange allows for the automatic deduction of tax by employers and pension providers on these pensions in appropriate cases.

Finally, mandatory tax returns would be unlikely to remove the need for means testing, given that means and income are not necessarily the same. However, the Revenue Commissioners further advise that they are currently working with one Government Department and one public sector agency, both of whom conduct means-testing for State benefits to develop an interface that will allow those organisations get a full picture of all income returned to Revenue by the person concerned.