Press Conference Revenue Commissioners Annual Report 2006 - 29 May 2007
Introductory Comments by Mr. Frank Daly, Chairman
Introduction
Ladies and Gentlemen I welcome you here for the publication of our Annual Report for 2006. Thank you for coming.
Before we begin I would like to introduce my two colleagues on the Revenue Board - Commissioner Josephine Feehily and Commissioner Michael O’Grady.
This is Revenue’s 84th Annual Report.
Format
This year we are providing the second report on our Strategy Statement 2005–2007 which highlights 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.
These three Goals and their associated strategies represent the heart of the document before you. Once again, we highlight our successes in meeting our targets but we also make reference to some areas where performance has not met the targets we aspire to and needs improvement.
I would now like to make a few comments on the substance of the Report itself. Afterwards, we will be happy to take any questions which you may wish to raise.
Receipts
Tax and duty receipts again reached record levels in 2006
- Net receipts were €45.5 billion, €6 billion above the corresponding figure for 2005 and almost €3.7 billion above the Budget estimate
- Strongest performers were VAT and Income Tax which between them accounted for 56.7% of total revenues.
The scale of our tax collection operation is probably well illustrated by highlighting a couple of figures for you. The daily payments to the Collector General’s Office during 2006 averaged almost €200 million (€198.88 m) while the largest amount lodged on a single day was €1.7 billion.
Investigations
We are still collecting significant tax, interest and penalties from the ongoing special legacy investigations: we added a further €119 million during 2006, including €55 million under the Offshore Assets investigation and €33 million under the Single Premium Insurance investigation. To bring you up to date – a further €34 million has been collected from these special investigations so far in 2007 (30 April). This brings the overall yield from these investigations (as at 30 April 2007) to an impressive €2.3 billion, made up as follows:
- Bogus Non Resident Accounts : €854.2 million
- Offshore Assets: €862.7 million
- Single Premium Insurance Products: €425 million
- Ansbacher: €74.6 million
- National Irish Bank/Clerical Medical €59 million
- Tribunals: €39.9 million
Of course the €2.3 billion direct yield from these investigations is not the full story – we have no doubt at all that significant additional revenues continue to accrue from the “compliance effect” of these investigations – the extent of this yield is difficult to quantify but it is certainly there and will continue into the future.
[The Offshore Assets investigation has now become the highest yielding investigation ever conducted by Revenue. Its success has attracted considerable interest from some Tax Administrations abroad and indeed the model is now either being considered or followed in some jurisdictions.]
Construction Sector Project
During 2006 we paid particular attention to tax compliance in the Construction sector – in fact we committed 25% of our national audit and compliance resource to this area. A wide-ranging audit and assurance programme yielded €146 million in tax, interest and penalties from this sector. Some 1,600 site visits also identified over 1,000 cases not registered with Revenue and almost 500 sub-contractors who were reclassified as employees. We have continued this project into 2007 and to date (end April) we have collected over €60 million from audit and assurance activity.
Customer Service
Revenue now has well over three million customers and each year we receive nearly 7 million telephone calls and nearly a million people call into our offices. That translates to almost 30,000 phone calls and over 4,000 personal callers for each working day. It’s a huge interaction with the citizens of this country.
It needs the best of customer service.
During 2006 we launched a number of customer service initiatives. Most significant was the launch of the PAYE anytime service which gives our PAYE customers the opportunity to ‘self-manage’ their tax affairs. We are encouraged by the initial take-up of this service. Of course, we continue to provide a range of other channels for taxpayers to do business with us including touch-tone phones and texting.
Our customer base continues to grow at an extraordinary rate. We now have 2.2 million PAYE employments on our records – up 5.2% on 2005 and 25% (or 500,000) on the number on record just five years ago. Self-employed registrations and Corporation Tax registrations grew by 7.9% and 7.6% respectively in 2006.
This growth in our customer base, naturally, translates into increases in correspondence, telephone calls and in personal calls – each of which reached record levels in 2006.
Despite these increases, a combination of factors, including the introduction of our new PAYE anytime system, allowed us to deal with the increased business – mostly within our published service standards. Despite the huge volumes, we now consistently respond to 90% of all calls to our PAYE 1890 service first time.
“Helping Taxpayers Claim” Initiatives
In tandem with our new services we ran a month long, nationwide publicity campaign late last year to highlight the availability of a wide range of tax reliefs and credits and to encourage those entitled to claim to do so. We believe this campaign was a considerable success and resulted in a big increase in the number of claims for PAYE annual reviews by taxpayers claiming additional credits. Three times as many claims were made in the period September to November 2006 compared to the same period in 2005.
Our aim in Revenue has always been to encourage people to claim every relief and credit to which they are entitled. More than that we want to make it as easy as possible for them to do so – indeed we want to make it as easy as we can for anybody to do business with us. During 2006, following measures signalled in the Budget, we committed ourselves to a series of simplification measures to make the process of claiming reliefs as easy as possible.
2007 will see the first fruits of this initiative:
- Already, eligible taxpayers can now receive the interest on their DIRT accounts gross from their financial institution without having to apply directly to Revenue for a refund.
- Later this year we will automatically grant certain age related credits to PAYE taxpayers without the need for them to apply to us.
- Later this year also we hope to finalise arrangements which will allow the membership details of individual trade unions to be fed into our computer system so as to provide the Trade Union tax credit to the individual involved automatically.
In 2008 we aim to provide for automatic refunds of other claims such as:
- Medical insurance premiums paid by the employer
- Hospital expenses not covered by medical insurance
- Pharmacy costs not already reimbursed under the drugs refund scheme
- Tuition fees in respect of approved courses in certain colleges
Further Simplification
Our simplification agenda is not confined to personal taxpayers. During 2006 we also introduced simplified filing arrangements for employers whose annual PAYE/PRSI liability was €30,000 or less. This initiative reduced the administrative burden for some 76,000 small and medium sized employers. A similar initiative is being extended to VAT in 2007 and will make things easier for similar numbers.
Over the next couple of years we intend to redouble our efforts to reduce the regulatory burden and simplify procedures.
It’s in all our interests to make the business of tax as simple as possible and Revenue will make this a key theme of our Statement of Strategy for 2008-2010.
Prosecutions
Revenue continues to devote considerable resources to identifying and preparing cases of serious tax and duty evasion for prosecution. You will see from the Report that in 2006 there were seven convictions.
The up to date (18th May) situation on prosecutions of serious tax and duty evasion is as follows: we now have 51 cases under investigation with a view to prosecution; 12 cases are with the DPP; In 16 cases the DPP has given directions to prosecute and we have 21 cases in the courts process. Already this year we have secured four convictions for serious duty evasion.
During 2006, as well as the seven convictions which I have mentioned already, a further 515 convictions were obtained for summary offences such as cigarette smuggling, unlicensed trading, Marked Mineral Oil offences and oil laundering. There were a further 1,295 convictions for non-filing of tax returns.
Smuggling
During 2006, Revenue again played a key role in protecting society from illegal drugs, contraband and other forms of criminality. Our Customs Service made over 1,500 seizures of drugs with an estimated street value of €8.6 million. In the first five months of 2007, they have made over a thousand seizures of drugs with an estimated street value of over €2 million. Cigarette smuggling is a growing problem, particularly through our airports. Over 50 million cigarettes were seized in 2006, including nearly 2,000 seizures totalling 22 million cigarettes in Dublin airport alone. So far in 2007, 25.5 million cigarettes have been seized. (18th May)
A more tax compliant country?
While some aspects of tax and customs compliance continue to cause us concern, our overall sense right now is that compliance generally is improving and that we are becoming a more compliant country. Certainly the level of declared tax debt is now exceptionally low by international standards – probably the best of any comparable tax administration – and timely return filing and payment rates have been steadily increasing over recent years.
As regards the shadow economy of undeclared income and transactions, there is no doubt that lower rates of direct taxation have greatly influenced improved compliance. But there is no doubt also that the highly visible success of Revenue’s audit and compliance activity and not least our “legacy” investigations has been a strong force in changing attitudes. There is a growing realisation that we have both the powers and the determination to tackle tax evasion; that there are few safe havens for hot money; and that the consequences of getting caught – involving publication, as well as very significant interest and penalties and the possibility of prosecution – are no longer worth the risk.
Conclusion
Revenue occupies a unique position in Irish civic life. The functions we carry out and the services we provide are essential to the economic and social well being of every citizen in the State. Every day, in over 130 offices around the country, Revenue staff carry out an extensive range of activities – from dealing with individual taxpayers to detecting illicit drugs; from seizing contraband to managing the largest computer system in Ireland.
As an organisation we can take quiet pride in the fact that we have notched up some remarkable achievements in recent years. We commit ourselves to further improvement and innovation in the years ahead.
I’m pleased also to note that during 2006, even as we dealt with huge increases across all our business activities, we also managed to reduce the cost of administration in Revenue to just 0.77% of gross receipts – a new low and one that compares very favourably with worldwide tax and customs administrations.
At the end of our 84th year then I am pleased to report solid progress on so many levels and to record our professional satisfaction with a very successful year.
On behalf of the Board, I express our appreciation to all those tax and customs practitioners and other professionals whose co-operation is so vital to an effective tax and customs system.
Most of all, on behalf of the Board I express our thanks to our staff, who throughout yet another exceptionally busy year, have made all of these things possible.
We would now be happy to take any questions.