Press Conference on 2005 Annual Report 31 May 2006
Introductory Comments by Mr. Frank Daly, Chairman
Introduction
Ladies and Gentlemen I welcome you here for the publication of our Annual Report for 2005 which I have earlier presented to the Minister for Finance. 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 83rd Annual Report.
Format
This year we are providing the first 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 the targets which are set out in our Strategy Statement but we also note the areas where performance has not met these targets and needs improvement.
I would now like to make a few comments on the substance of the Report itself beginning with the first of our goals. 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 2005
Gross receipts were over €54 billion, over €5.4 billion ahead of 2004. Net tax and duty receipts reached almost €39.5 billion, some €3.7 billion ahead of the previous year and €1.8 billion above the Budget estimate.
Over €7.7 billion was collected on behalf of other agencies. (PRSI & Health Contributions €7,544 million; Environmental Levy: €17.5 million; Tobacco Levy €168 million).
The scale of our tax collection operation is probably best illustrated by highlighting a couple of figures for you. The daily payments to the Collector General's Office during 2005 averaged €176.95 million while the largest amount lodged on a single day was €1.6 billion.
Investigations
Moving from normal receipts to what might be called exceptional - the cumulative total receipts from all of our special investigations has now reached €2.214 billion.
2005 indeed saw the announcement of one new major legacy investigation as another neared completion.
The voluntary disclosure phase of the investigation into untaxed funds invested in certain Single Premium Policy insurance products was launched in April of last year and saw over 5,000 individuals who had tax issues make payment of €382 million. We have since used new provisions in the Finance Act to allow us to sample cases in insurance companies with a view to providing material to enable us to seek High Court Orders. This process which had begun by year end, as the report states, has now been completed. We hope to be in a position shortly to seek the first of the High Court Orders which will mark the next stage in the investigation.
The Offshore Investigation has moved to the stage where we have obtained most of the High Court Orders which we require. We have begun the work of sifting the information obtained from the financial institutions involved. We will then move on to the next phase of the investigation: contacting the account holders directly following the pattern established in our Bogus Non Resident (BNR) investigation.
The BNR investigation itself is now nearly complete - 99% of cases have been finalised. This campaign, the first of what have come to be known as our major "legacy" investigations, has provided its own legacy for us. Back in 2001 when we warned that we would pursue those who did not avail of the voluntary disclosure option some tax evaders chose not to believe us. This was a very expensive mistake on their part. Thousands of people have found to their cost that we meant exactly what we said.
As I've said the cumulative total from all our special investigations (Single Premium Insurance Policies, Offshore Assets, Bogus Non-Resident Accounts, Ansbacher, the Clerical Medical Insurance/National Irish Bank Scheme and Tribunal-related enquiries) currently stands at €2.214 billion. €536.8 million of this was collected in 2005, including €382 million from the Single Premium Policy Investigation initiated during that year. In the first five months of 2006 we have collected €52 million - an average of over €10 million per month.
Just like every Revenue authority in every free society, we depend on voluntary compliance by honest citizens to collect the taxes and duty which the law demands. The legacy of our determination to see the BNR campaign through to conclusion has benefited us in this effort. It has been a matter of some professional pride to us that we, in turn, have demonstrated the will, the skill and the persistence to tackle large-scale complex investigations. But more than that, our reputation for treating honest taxpayers fairly and pursuing tax evaders relentlessly has been strengthened by performance on all of these investigations over the past five years - that's a matter of real importance to me and to all my colleagues in Revenue.
Debt Management
One of our real success stories has been our progress on tackling outstanding debt. Revenue debt decreased by €132 million or 11% over the year. Arrears as a percentage of total gross receipts now stand at an historic low of 2% - one of the lowest of any tax administration worldwide. Revenue's Statement of Strategy 2005-2007 goal of reducing debt to 2.5% of gross collection by 2007 has already been exceeded.
To put the current 2% figure in context - seven years ago debt was 10% of taxes collected - seventeen years ago it stood at 57%.
I should also point out that we will collect over 90% of the outstanding debt.
Prosecutions
In our current Strategy Statement we commit ourselves to increasing the number of prosecutions for tax and duty evasion. In fact I recall at this event last year referring to our prosecution programme as work in progress. I am pleased to report that the time, energy and resources which we have devoted to this area have produced results for 2005. We have 24 successful prosecutions - 12 for serious tax evasion and 12 for serious duty evasion. This is the highest number ever of cases of investigations by Revenue which led to prosecutions on indictment. Three custodial sentences, seven suspended sentences, two community service sentences and fines in excess of €200,000 were imposed by the Courts in these cases.
Currently 61 cases of serious tax and duty evasion are under investigation for potential prosecution, the DPP is considering 12 cases and has given directions to prosecute in another 8 and 20 cases are in the Court process - a total of 101.
It's also worth noting (although it rarely seems to attract attention) that in 2005 we secured 1,683 convictions for summary offences such as cigarette smuggling, unlicensed trading and oil laundering - including well over a thousand convictions for non-filing of tax returns.
General Progress
I would like to highlight a number of other significant areas from the Report:
- Collection enforcement through solicitors, sheriffs and Attachment Orders yielded €226.4 million from almost 51,000 cases.
- Total audit and assurance check activity yielded €575.37 million.
- The names of 629 tax defaulters were published in connection with audit settlements amounting to €116.94 million.
Customs
Revenue, and our Customs Service in particular, plays a vital role in protecting the country from the dangers posed by smuggling and the threat of imported drugs. 2005 was marked by conspicuous success which was the result of hard work and continued co-operation with our colleagues in the Garda Siochana and the Naval Service in particular.
- Drugs with an estimated street value of over €37 million were seized, and more than €500,000 of suspected criminal cash was detained.
- 51.28 million cigarettes and 1.1 tonnes of tobacco, with a value of €15.6 million and €314,000 respectively, were seized by our Customs Service.
- Two oil laundries were detected, 310,000 litres of laundered oil seized, and 20 retail outlets detected selling laundered oil.
- A new €3 million mobile x-ray container scanner was delivered in October 2005 and commissioned by An Taoiseach, Mr. Bertie Ahern, TD in February 2006 at the New Custom House in Dublin Port.
Service
I want to speak about Customer Service in more detail later on but I would firstly like to highlight some of the major achievements in this area in 2005:
- Use of the Revenue On-Line Service (ROS) grew very strongly in 2005. The number of payment transactions made via ROS increased by 61.4% to 290,842 while the value of the payments made via ROS increased by 45.8% to €12.1 billion. Almost two thirds (65% or 248,967) of income tax self-assessment returns were made through ROS.
- A major redesign and modernisation of the PAYE computer system was completed.
- A range of self service channels - including voice activated telephony, web forms and SMS (mobile texting) facilities - was introduced to improve customer service.
- Our document 'Cooperative Compliance - Revenue working with Large Business' was published. By the end of the year, 25 of Ireland's largest businesses had agreed to engage our Large Cases Division in this innovative cooperative compliance approach.
Customer Service
As we acknowledge in the report, our ability to deliver quality customer service came under severe pressure during 2005. We outline a number of contributory factors in the report including the significant increase in our tax base. The figures involved, 46,837 more self assessed taxpayers and 134,881 more PAYE employments, year on year, give you some indication of the scale of our operation. We also notice more complexity in the cases we deal with and the additional time it takes to talk tax to people for whom English (or Irish) is not their first language.
A combination of these factors has made it difficult for us to deliver the standard of customer service which we would wish provide. These are explanations - they are not excuses. We are sorry that our responses to some taxpayers were not what they should have been during the year. We are a customer service organisation and we are determined to build on our hard-earned reputation for delivering top quality customer service.
The challenges we face in the field of customer service delivery are new challenges and they call for new responses. We cannot possibly hope to meet the increasing demands on our customer services without innovative thinking.
Revenue's On-line Service (ROS) has been one of our major success stories of recent years. The opportunity to deal with your tax affairs on-line without the need to phone, or write, or call to our offices, has been of enormous benefit to our self-employed and business customers. It has proved enormously popular: 64% of timely returns filed via this system last year.
We now intend to offer a similar service to PAYE taxpayers. Naturally, like all of these services, there are registration and security requirements involved, however the advantages are enormous. No delays, no queues, view your up to date tax record, and so on. We will be rolling out this new service over the coming months - starting indeed this coming weekend - and I will be writing to every PAYE taxpayer in the country to tell them about it.
Our second goal
Our strategy statement sets out the following as our second goal:
"To be a capable, flexible, results-orientated organisation".
Recent and planned technological developments and improved organisational structures have provided the platform to allow us to achieve this goal. However developing our people is the key element in its achievement. To deliver on our business targets we need to have the right people, with the right skills deployed in the right areas.
In this context the highlight of 2005 was the graduation of the first batch of 113 Revenue officials to be awarded Diplomas in Applied Taxation from our groundbreaking course involving the partnership between Revenue and the University of Limerick. This will be an annual event and we will be telling you in future about successful candidates from a degree programme starting in the autumn.
We are also actively recruiting new staff with the skills, educational background and life experiences to help us achieve our goals.
Our third goal
Our third goal is "To play our part nationally and internationally".
At a national level we again played our part in cross-departmental government programmes and initiatives. We also provided advice and support to the Department of Finance across a broad range of measures which were contained in Finance Act 2005. One provision contained in the Act has strengthened our capacity to prosecute those who are involved in tax evasion. It is now an offence to be knowingly concerned in the fraudulent evasion of tax, whether for one's own benefit or for the benefit of any other person.
Last year we played an important part in the major reviews of incentives and reliefs which the Minister announced in his 2005 Budget statement and which led to significant changes announced in his subsequent (2006) Budget statement.
There were significant and very welcome developments on the international front as well. The EU Savings Directive, the ever-growing list of countries with which we have concluded Double Taxation Treaties and work at EU level aimed at delivering a "paperless environment" for Customs are good indicators of the importance of international co-operation for us and, indeed, for all Tax and Customs authorities worldwide.
Conclusion
Last year we instituted a new Long Service Award for staff members who have worked for the state for 40 years or more. 123 people were eligible in 2005 and a further 77 earlier this year.
The work we do is not easy. It's sometimes very technical, sometimes very difficult, sometimes very pressurised, sometimes very demanding - and sometimes indeed even dangerous. I've always felt that it's a remarkable feature of this organisation that we retain the loyalty of so many people who are willing to serve their entire career with Revenue. When we welcome new people to the organisation that is something we emphasise with pride.
I have recently commended our staff for their efforts over the past extraordinarily busy twelve months. I think it's only fitting to again record my own, and the Board's, appreciation of their patience, creativity, good humour and sheer hard work.
At the end of our 83rd year I am pleased to report solid progress on so many levels, to note that the vital signs in Revenue are good and to record our professional satisfaction with a very successful year.
We would now be happy to take any questions.