The Revenue Business Context
The Revenue Business Context
What Revenue does is important
Revenue, as the Irish Tax and Customs Administration, plays a critical part in securing Ireland's fiscal, social and economic foundations. Through its role in collecting tax and social insurance contributions Revenue delivers most of the resources that allow Governments to provide programmes and services that improve the quality of life of our people. Tax is also an economic tool through which Governments seek to develop the economy, to redirect resources and to influence behaviours.
Revenue's Customs Service is in the front line in the fight against drugs smuggling and the illegal importation of contraband and counterfeit goods. At the same time the Customs Service facilitates the smooth movement of legitimate trade in goods into and out of the country – trade facilitation is particularly important in a small, open economy such as Ireland's.
Revenue and the Community
All modern tax and customs systems depend on strong community norms of compliance. Our main strategic objective is to maximise the "voluntary" level of such compliance. The community now expects – indeed demands – that people and businesses should fully comply with their tax and customs obligations. There is also an increased awareness of the negative impact of tax evasion and tax avoidance on our ability to fund essential services. In turn, the public expect Revenue to help and inform them, not only of their compliance obligations, but also of their entitlements, for example, to tax credits and other available reliefs. We have made good progress in this area and have plans to do even more in the immediate future.
Intermediaries
Modern tax and customs administration also depends to a large extent on intermediaries: the employers who operate the PAYE system; the accountants, lawyers and others in the tax practitioner community who provide advice and compliance services; the freight forwarders and customs agents who handle the bulk of imports and exports; and the trade associations and representative bodies who can be key facilitators and influencers in relation to the sectors they represent. We value our productive relationship with these bodies and will continue to seek further opportunities to engage with all key intermediaries to improve compliance and simplify tax and customs administration.
Government Programmes
Tax and customs administration does not operate in a vacuum; Revenue works with other Government Departments and agencies to advance strategies and policies set out in agreed programmes.
The strategic context for this Statement is the Agreed Programme for Government "A Blueprint for Ireland's Future 2007-2012". Revenue will work to develop, support and implement all aspects of this Programme that are relevant to our operations, particularly those arising from the tax reform agenda (including new measures to support the environment), the work of the Commission on Taxation and regulatory reform.
This Statement also takes account of the strategic framework contained in "Towards 2016" and the National Development Plan 2007-2013. Revenue will work closely with the Department of Finance and other relevant Departments and agencies to advance the realisation of the agendas set out in these and other agreed programmes.
The changing environment
Over the past few years Revenue has adapted and restructured itself to deal with the challenges of a rapidly changing environment. Apart from implementing significant tax and customs legislative reforms, for Revenue these challenges included: an extraordinary increase in our business (see the Table on Page 11); managing the tax implications of the growth in individual wealth; managing the increasing complexities of business models; new technology; a changing workforce impacted by large-scale immigration and new work patterns; and the changing expectations of our customers and our staff.
Impact of slower economic growth
The exceptional rate of growth in our customer numbers and volume of business over recent years is likely to slow somewhat over the period of this Statement – in line with the forecast slowdown in economic growth (GNP growth is expected to average 3.3% over the period 2008-2010[1]). Slower growth is likely to present a greater challenge for our debt collection efforts and achieving our targets for timely compliance rates.
[1] Department of Finance, Budget 2008
Competitiveness and international
The quality of Revenue's management of the tax and customs systems can play a major part in improving the competitiveness of the Irish economy, including facilitating inward investment. So also does the quality of the assistance Revenue provides to the Minister through the Department of Finance on the development of tax policy. Simplification, providing clarity on interpretation of the tax and customs codes, and expanding our network of tax treaties are all part of this competitiveness agenda.
Security in international trade continues to present us with particular challenges. We aim to influence policies in this area in a way that facilitates legitimate trade to the greatest extent possible consistent with our security and anti-smuggling responsibilities.
Internationally, there is also a significant agenda at EU level and in other organisations (such as the OECD and the WCO) on customs and tax issues, including cross-border co-operation. In conjunction with the Department of Finance we will seek to influence the developing agenda and articulate Ireland's position on important international issues.
Technology
We have already delivered significant information and communications technology (ICT) based solutions to simplify our systems, cut costs and speed up delivery of our services. Our Revenue On-Line Service (ROS) is widely regarded as one of the best tax on-line filing and payment systems in the world. We will invest further in the use of ICT to deliver even more service options and better and quicker access to our services, particularly through electronic channels, for the public and businesses.
More customised service delivery
There is a growing demand for more customised and personalised forms of service delivery – taking greater account of the fact that people have different preferences, for example, as to the communication channels they wish to use, or the framing and content of information and communications. Revenue has a rich source of data about customers that could be used to tailor and target communications and information campaigns, including the prompting of claims to tax reliefs or credits in appropriate circumstances. We will explore the possibilities of using filtering, analytics and other techniques to provide more customised service delivery.
A greater focus on risk
Over recent years we have focused increasingly on those who pose the greatest compliance risk. We intend to intensify this focus. Our Risk Evaluation, Analysis and Profiling System (REAP), a computer-based, rules-driven risk scoring system, is central to our systematic approach to dealing with risk. We will use REAP as the principal tool for audit case selection, identifying high-risk sectors or segments in our taxpayer base, and identifying likely instances of undeclared income, gains and other taxable transactions.
We will also develop new audit and compliance programmes to cover areas of emerging risk, including taxes that have grown significantly in recent years (such as Capital Gains Tax and Stamp Duty) and the "PAYE sector", where the risk of undeclared income or gains could increase commensurately with changes to the profile of that sector.
Tax avoidance and evasion
This risk-based approach, combined with more sophisticated use of third party information will enhance our capability to identify and confront tax evasion.
Aggressive tax avoidance and unintended use of legislation continues to present real risks to the tax base and the fairness of the tax system. We intend to intensify our efforts to challenge such arrangements, including proposing legislative solutions, where appropriate.
Drug interdiction
Combating substance abuse through a concerted focus on supply reduction, prevention, treatment and research is a priority area for Government and the social partners. Revenue, particularly through its Customs Service, is committed to making a real contribution to this goal through effective drug interdiction. To this end, we will develop a specific strategic plan for drug interdiction to cover the period 2008–2010.
Our Organisation
Modernisation
We expect the ongoing programme of public sector modernisation to intensify, particularly with a view to delivering high quality services to the public. Modernising measures to be implemented under the terms of "Towards 2016" include open recruitment at senior levels, greater use of competitive processes for promotion, outsourcing of work, shared services and a range of measures to support better mobility and workforce planning.
The modernisation programme is also being driven through initiatives such as the OECD Review of the Irish Public Service, the Organisational Review Programme agreed by the Government in 2007 and the Efficiency Review announced in Budget 2008.
Revenue has been to the fore in recent years in modernising, restructuring and achieving efficiencies. We will participate actively and positively in all of these programmes.
Decentralisation
Revenue is deeply involved in the implementation of the Government's decentralisation programme. During the lifetime of this Statement we will open new decentralised offices in Athy, Navan and Newcastle West, and progress planning for our further decentralisation commitment to Kildare.
Our Staff
The objectives we set ourselves in this plan will not be realised without the dedication, technical capability and integrity of our staff. Partnership with our staff and unions will continue to be an important aspect of the management of our organisation.
We face particular challenges in the period ahead arising from a higher than normal staff turnover rate. We will identify the critical gaps in our capability and put structures in place to ensure that these gaps are addressed. This will require new policies that better position us to attract, develop and retain high calibre, highly qualified staff.