Press Conference Revenue Commissioners Annual Report 2007
24 April 2008
Introductory Comments by Josephine Feehily, Chairman
Welcome and introductions
This is Revenue's 85th Annual Report. I'm pleased to say that for the first time we have published our report in an electronic rather than paper format.
This Report is the third progress report on our Strategy Statement 2005-2007 which had three main Goals:
- To ensure everyone complies with their tax and Customs responsibilities;
- To be a capable, flexible, results-oriented organisation, and,
- To play our part nationally and internationally.
Our progress towards these Goals and their associated strategies is reflected in the document before you. Overall, I think we made great progress in those three years.
We had a good year in 2007 and I would like to take a few minutes to draw your attention to some highlights and to bring some of the material up to date. Later on I want to say a few words about where we’re going this year and into the future.
Receipts
Last year we collected over €66 billion in taxes, duties, PRSI, levies and so on. We repaid or paid over more than €18.5 billion, giving net receipts in 2007 of over €47.5 billion - almost €2 billion above the corresponding figure for 2006. For the first time in five years, the receipts were below the Budget estimate, by €1.7billion. The cooling of the property market (Stamp duty alone was down €700million on the Budget estimate) together with moderating consumer spending, particularly in the second half of the year, were primarily responsible for the lower than expected receipts. A few interesting numbers:
- our average daily lodgement was €217million
- our largest daily lodgement was €1.63 billion
- our single biggest payment was €173.5 million
Helping taxpayers Claim
One of the most significant developments for Revenue in 2007 was the initiative announced in the Budget to help taxpayers claim their credits. This included automatically granting some credits; introducing a facility for dirt-free accounts for eligible over 65s; major advertising to encourage people to claim and to promote the PAYE anytime service. A few interesting numbers:
- PAYE Reviews went up by 14%
- Medical expenses claims went up by 19%, and we repaid nearly €59m
- 52,000 tax refunds worth €12million were made directly to people who are in the Drugs Payment scheme – for the unreimbursed amounts
- 330,000 PAYE transactions were made over self-service channels.
Service for Business
On the business side we reduced the VAT filing frequency for over 70,000 SMEs; we provided a dedicated 1890 LoCall for Employers, and the Revenue Technical Service was launched aimed primarily at giving practitioners and businesses certainty on tax interpretations. A new web-based system for Customs entries went live in June 2007 and I’m delighted to say that we have direct trader input of almost 99%.
Compliance
Coverage of the taxpayer base is an important dimension of our compliance programmes, and in 2007 between audits and assurance checks we made over 250,000 compliance interventions – up ⅓ on 2006 – which yielded €734 million.
Included in these figures are some significant sectoral projects such as the Construction project which yielded €151.4million from almost 44,000 interventions.
Our legacy investigations continued. Most of the activity in 2007 related to Life Assurance products, which yielded over €30million, but most of the money came from the offshore Assets programme which yielded €54million. The cumulative total from our legacy investigations since the beginning of the bogus non-resident accounts is now €2.424 billion.
Prosecutions
In 2007 we had 14 convictions for serious tax and duty evasion – 9 tax and 5 duty. In the first 4 months of this year we’ve had 10 more convictions - 6 tax and 4 duty with sentencing deferred in one case.
There were also 1,263 convictions last year for not filing tax returns and 500 for various duty and smuggling offences.
Drugs and Contraband
Last year drugs with a street value of €139million were seized – although most of that just arrived off the south coast! Almost 75million cigarettes, about €500,000 suspected criminal cash, assorted weapons and illicit medicines were seized.
So far this year we have seized drugs worth almost €7.8million, 41million cigarettes and a very substantial €1.82million in cash under the Proceeds of Crime Act.
An Efficient and Effective Organisation
We are particularly proud that in 2007under our partnership programme with the University of Limerick, the first class of 36 Revenue officials graduated with a BA Honours in Applied Taxation and another class is underway.
A few key measures of our performance:
- In the 5 years from 2002 – 2007 we successfully managed a huge increase in business volumes - PAYE Customer base up 25%, VAT registrations up 25%, 50% increase in self-assessed returns, 30% increase in companies
- Cost of administration was 0.8% of gross receipts– very low by international standards
- Debt was 1.9% percent of gross collection – ahead of our own target and the lowest in a benchmark study carried out by Singapore Revenue
- A PWC/World Bank survey put us 6th out of 178 countries under the heading "easiest place to pay tax"
- In surveys 88% of PAYE respondents and 84% of small business respondents were satisfied with our service
We are proud of those results and particularly pleased at the external validation of our performance.
Where next?
In February we launched out latest Statement of Strategy for 2008-2010. In it we set out our stall for the next three years. The Goals are broadly the same but the emphasis is shifting.
In a nutshell, Revenue's strategy for the next 3 years is to be an organisation that:
- provides excellent service, increasingly customised, and increasingly delivered electronically, and
- focuses our compliance activity on the riskiest cases, in the riskiest sectors.
Regarding electronic services, next year we plan to roll out e-stamping and e-registration for businesses, and can I tell you that tomorrow we will be commencing a public consultation on the selective introduction of mandatory e-filing. A copy of the consultation paper is available here for you. We are also actively pursuing avenues to minimise compliance costs for business, especially SMEs and micro-businesses.
Regarding our compliance strategy, we have developed a sophisticated Risk Analysis and Profiling system (REAP) which is coming into its own as it is increasingly populated with Revenue data and 3rd party data. For example REAP already includes information on property transactions and next month will include data received under the EU Savings Directive. The corollary of better targetting is that most of the time we hope to be able to leave compliant taxpayers alone.
Our focus on risky sectors will be informed by pilots done in various Revenue regions, and this year we have a particular focus on cash businesses.
In our role as the Irish Customs administration, our focus on risk will be underlined by very significant investment in our maritime and scanning capability.
Globalisation means that International co-operation will grow, both on the tax and customs sides of Revenue. We will be assigning officers to Europol in the Hague and to the Maritime Analysis and Operations Centre for Narcotics in Lisbon. We will be heavily involved in work in the OECD to develop enhanced relationships between tax administrations.
In 2007 negotiations for 4 new double taxation treaties were concluded and we have a target for 16 over the next 3 years. We also have had a long term objective to support our investigations into tax evasion by having Tax Information Exchange Agreements with offshore jurisdictions and I am pleased to say that the first one is being signed today by the Tánaiste. This agreement is with the Isle of Man.
Our fundamental aim, in all that we do, is to make it easy for people who want to do business with us and to make it difficult for those who don't.
Conclusion
On behalf of the Board I would wish to place on record our thanks to the tax and customs practitioners and other professionals who play such a vital role in the tax and customs system in Ireland.
The range of activities we in Revenue carry out is enormous, from collecting tax to patrolling the high seas. What we do makes a difference in the life of every Irish citizen. Our organisation could not hold this central role in society without the commitment, expertise, courtesy and enthusiasm of Revenue staff who come to work every day. Revenue is recognised nationally and internationally as a public service organisation which is flexible, innovative, fair and forward-looking. These too are the attributes of our staff. We take this opportunity to say a public thank you to our staff for all of their hard work during 2007, and to acknowledge the leadership and very significant contribution to Revenue by my predecessor and our much respected colleague, Frank Daly.
Revenue has 85 years of experience of serving the people. I am delighted to report that, as an organisation, we are in robust good health and looking forward to the challenges that lie ahead