Matt Shanahan (Waterford, Independent)
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152. To ask the Minister for Finance the details of the latest understandings regarding the number of businesses and the outstanding debt that remains within the debt warehousing scheme that relate to businesses that have still not engaged with revenue; and if he will make a statement on the matter. [23235/24]

Michael McGrath (Cork South Central, Fianna Fail)
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The Tax Debt Warehousing Scheme was introduced in May 2020 to provide a vital liquidity support to businesses impacted by Covid-19 trading restrictions. The scheme allowed businesses to temporarily ‘park’ eligible taxes, on an interest-free basis, until 1 May 2024. At its peak in January 2022, there was €3.2 billion debt in the warehouse, the vast majority of which related to VAT and payroll taxes deducted by employers from their employees.

The scheme has now ended. Over 11,000 customers, with debt balances greater than €500, had not engaged with Revenue to address their warehoused debt by 1 May. Customers who had not engaged with Revenue to address their warehoused debt received a demand notice on 8 May 2024 giving one final opportunity to address their debt and avail of the 0 per cent interest rate on that debt. With effect from 15 May, Revenue’s systems were updated to automatically apply the standard interest rates of 8 per cent and 10 per cent on any outstanding warehoused debt. The next step for those who haven’t engaged on foot of the demand notice is that Revenue will start its collection process. Final demands are now issuing, giving seven days’ notice of enforcement action, unless there is immediate engagement by the taxpayer.

Revenue has confirmed to me it is currently working through several hundred applications for Phased Payment Arrangements (PPAs) that have been received over the last two weeks. When this process is complete, Revenue will conduct a full analysis of the PPAs agreed and the outstanding debt cases, including Divisional and Sectoral analysis. This will be published by 31 May 2024.

It is important to note that to retain the 0 per cent interest rate in an agreed PPA, it remains a key condition that current taxes are filed and paid as they fall due, and that all monthly PPA instalments are honoured as agreed. Any taxpayer experiencing temporary cashflow difficulties that impact on their ability to meet their tax obligations on a timely basis, including scheduled monthly payments, should engage with Revenue at the earliest opportunity. Revenue will always work with viable businesses to agree mutually acceptable payment solutions, such as a payment deferral or a payment break, rather than deploying debt collection and enforcement options.

Rose Conway-Walsh (Mayo, Sinn Fein)
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153. To ask the Minister for Finance the methodology for calculating tax revenue projections in the Stability Programme Update, making particular reference to whether tax revenue projections are carried out on a no-policy change basis, or if it is assuming adjustments to credits and bands in line with inflation; and if he will make a statement on the matter. [23424/24]

Michael McGrath (Cork South Central, Fianna Fail)
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My Department’s projections for taxation revenue are driven by the relevant macroeconomic indicators: for example, forecasts of income tax are related to labour market variables such as wage growth. The projections also account for other factors that can impact on receipts, such as once-off factors, specialist judgement, and policy measures.

My Department periodically reviews its methodology for forecasting tax revenue, most recently in 2019 with the publication of the Tax Forecasting Methodological Review. This report provides a comprehensive overview of the Department’s approach to tax forecasting and can be found at the below link.

www.gov.ie/en/publication/76468a-tax-forecasting-methodological-review-2019/

The Stability Programme Update is a no-policy-change document and the policy measures reflected in the tax revenue forecasts are, accordingly, in line with Budget 2024.

As in the last number of years, the projections also incorporate an indicative tax package each year from 2025 in the order of €1.1 billion as outlined in Government’s medium term budgetary strategy set out in the Summer Economic Statement 2023.

It should be emphasised that this is a technical assumption: Government will set out the parameters for Budget 2025, including the size of any tax package, in the upcoming Summer Economic Statement.