Economic boom returns record tax receipts

PAYE workers paid almost £380 million more income tax to the exchequer last year than they did in 1995, according to new figures published yesterday.

The total amount of income tax paid by this category of employee was £

3,894.4 million, up more than 10 per cent on the previous year, partly reflecting the rising number of people at work.

The PAYE figures, contained in the Revenue Commissioners annual report for

1996, are in line with all other area of tax revenue, which also increased over

1995 figures. When added to other income tax from the self-employed and other non-PAYE sources as well as DIRT and withholding tax, the amount of income tax paid last year was £4,579 million.

The tax yield from the self-employed increased by 11.4 per cent to £

527 million, the report says. With other tax headings also showing buoyancy, overall net tax receipts amounted to £12,096 million, around £

1,210 million higher than the amount collected in 1995. The report says that it reflects not only the buoyancy economic conditions of 1996, but claims it is also evidence of the "fruits" of its policy of promoting voluntary compliance and in streamlining its collection and enforcement proceedings.

The reports shows that :

Overall income tax receipts were up by £450 million or almost 11 per cent on the 1995 figures. The Revenue attributes this to an increase in the number at work, increased employee remuneration, an increase in tax payments by the self-employed and an increase in DIRT receipts.

The amount of money collected through VAT amounted to £3.1 billion, up £220 million on the 1995 figure, or 7.6 per cent. However, the underlying increase is nearer to 12 per cent, says the Revenue given that the yield would have been £119 million higher, but for the abolition of the advance payment of VAT last December. This was aimed at improving cash flow for businesses.

Indirect taxes contributed £5,413 million last year. The figure which includes VAT revenues, also includes £533 million from taxes on tobacco,

£552 million on alcohol, £353 million on motor vehicles, and

£795 million on hydrocarbons. Other indirect taxes raised £71

million.

Corporation tax was also up - by £280 million on 1995. Last year this tax raised £1,428 million. The report says a significant element of this is attributable to the return to profitability in 1995 of some financial and insurance sectors. These sectors had suffered in 1994 mainly from bond losses incurred that year.

The buoyant property market and heavy stockmarket trading meant that the tax take from Stamp Duty was also up, by £46.5 million on 1995 and took in

£332 million.

The yield from property transfers increased by 25 per cent while the yield from transfer of shares increased by 40 per cent.

Capital taxes raised £180 million. This figure includes Residential

Property Tax which raised £14.3 million last year, compared to £

12.1 million in 1995, it also includes Capital Acquisitions Tax and Capital

Gains Tax.

The Revenue Commissioners investigated and audited 21,357 cases, designed to ensure maximum compliance from the self-employed and businesses who pay under the self-assessment system. This work yielded £133 million in taxes, slightly down from the 1995 yield of £140.6 million from 24,539 cases.

The Revenue says that the reduction in the number of tax audits reflects a more indepth approach to auditing those with liabilities under particular tax headings. This has led to an increase in the average yield from the audits.

The Revenue also said that it took a wide range of measures against those operating in the black economy.

It also targeted traders who it felt were under-reporting their income and also gave specific responsibility to a customs mobile services to combat black economy activity.

Over 82,000 cases which were referred to the sheriff yielded £60

million. Almost £9 million was collected from 4,005 cases which were referred for solicitor action.

The Revenue has powers to seek sanctions for those who fail to comply with the tax laws. Last year 642 cases were referred for prosecution for failure to file income tax returns. Fines were imposed in 319 cases.

The Revenue referred 132 cases for prosecution for failure to file

Corporation Tax returns. In 43 cases fines were employed. Fines of £

1,200 were imposed 1,010 employers who failed to submit a P35 return.

The Revenue is also stepping up its efforts to combat "serious tax evasion".

A special prosecutions policy unit was established last year and a number of cases are now with the Garda Bureau for fraud investigation "and, where appropriate, referral to the DPP".

Overall the Revenue Commissioners have reported an increasing level of compliance in recent years, even though the taxpayer base has widened.

Tax returns by the due date have risen from 63 per cent in 1988/89 to percentages in the mid-70s in recent years, although there was a small drop in

1994/95. As a result of this and of the increase in the overall number of taxpayers, the Revenue says it has launched a special campaign to tackle latefilers and habitual non-filers. The cases are being worked "as a separate rapid pursuit programme and will be pursued to prosecution, where it is appropriate".

It has also pledged that £1 billion of the £1.9 billion of

"historic arrears" on file will be eliminated by the end of 1999. Some of this is money estimated to be owed by companies which either went out of business or never traded. The idea is to clear the books, as it is understood to be an issue of contention among the public and politicians, who regularly point out that the tax is "outstanding".

This amount of outstanding tax has regularly been used as a stick with which to beat the Revenue. Much of its appears to relate to over-estimates of tax bills dating back to the years before 1988 when self-assessment was introduced.

The Revenue Commissioners were also responsible for drafting two bills as part of the Government's anti-crime initiative in July 1996.

One, the Disclosure of Certain Information for Taxation and Other Purposes

Act was an attempt to improve the flow of information between the Revenue

Commissioners and the Gardai.

The other Act set up the Criminal Assets Bureau. The report says the new legislation "has significantly strengthened the capacity of the State to respond to the threat of crime in our society".