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Home > Dail Eireann debate. Written answers 53 & 54 - Hidden economy [Tobacco] [39508/12 & 9380/12].

[Oireachtas] Dail Eireann debate. Written answers 53 & 54 - Hidden economy [Tobacco] [39508/12 & 9380/12]. (19 Sep 2012)

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53. Deputy John Lyons asked the Minister for Finance if he will detail his efforts to tackle the problem of the black economy. [39508/12] 

54. Deputy John Lyons asked the Minister for Finance if he will detail his efforts to tackle the problem of the black economy; and the estimated loss to the Exchequer of revenue as a result of the black economy. [39380/12]
Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 53 and 54 together.

I am advised by the Revenue Commissioners that their tax and duty compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow economy.The hidden economy includes the suppression of sales, wages and income by registered businesses, fraudulent repayment claims, smuggling and trading in counterfeit and contraband goods, unregistered traders and individuals working and ‘signing’. It is a multi-faceted issue that requires a co-ordinated and multi-faceted response.

Revenue tackles the problem of the shadow economy through its range of compliance and audit interventions including through targeted special projects. Case interventions are undertaken based on Revenue’s assessment of compliance risks, the level of those risks and other relevant information available. Revenue is using a wide range of methodologies to identify those operating in the shadow economy and is deploying the full range of compliance interventions. Activities can include covert surveillance, cold calls to businesses and venues as well as its audit and investigation programmes. The Revenue’s approach to the shadow economy is underpinned by close consultation and cooperation with the Department of Social Protection. The primary objective of these activities is to uncover either non-declarationor under declaration of income and/or fraudulent DSP claims.

The Hidden Economy Monitoring Group provides a forum for the exchange of views on the effectiveness of measures introduced in combating the hidden economy. This group, which is chaired by Revenue, includes representatives from employer and business organisations, trade unions and other Government Departments and agencies. Regional hidden economy liaison groups have been established to facilitate greater local interaction and more immediate responses to insights and issues that may be highlighted. Increasingly Revenue is finding that bodies and individuals are prepared to share insights and specific information with regard to shadow economy activity.

The Deputy will be aware of the continuing strengthening of legislation to provide for a robust framework within which the Revenue Commissioners may tackle tax and duty evasion, including recent provisions relating to: -
-The making of returns of transactions by merchant acquirers, and other payment settlement entities, to the Revenue Commissioners.
-The more effective investigation of white-collar crime.
Other new provisions included a comprehensive package of measures in relation to Excise (Oils) including, requirement for separate licences for auto-fuel traders and marked fuel traders, requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place.

Revenue’s tobacco strategy, “Strategy On Combating the Illicit Tobacco Trade (2011- 2013)” was published on the Revenue website in June 2011. This three-year strategy is underpinned by annual action plans. The strategic level plans include taking steps to ensure that the legitimate trade remains compliant, delivering more effective and visible interventions through enhanced capability and better deployment of Revenue resources. The strategy also include further development of cooperation and intelligence sharing at national and international level, together with a commitment to prosecute all serious cases of tobacco tax evasion and a focus, in partnership with other Government agencies, on reducing the demand for contraband tobacco. During 2011 Revenue seized a total of 109m cigarettes in 10,581 seizures. Commercial quantities in maritime freight traffic accounted for 76.4m cigarettes. Revenue also seized 11,158kg of tobacco in 2011. In six particular operations, over 19m cigarettes, 1,344 kgs tobacco and 49 vehicles were seized.

Regulations were also introduced in 2011 requiring Government Departments and State Bodies to supply details to the Revenue Commissioners, of payments made. I am advised by the Revenue Commissioners that this data is matched to the Revenue records of the various recipients, and is used to profile risk. Similar matching is also carried out using other third party data received by the Revenue Commissioners. Revenue has a prioritised focus on those sectors that traditionally have been susceptible to shadow activity such as cash businesses. All possible sources of information, including following up on services advertised on TV, radio, local newspapers, internet, special interest publications are used by Revenue.

Revenue investigations have detected the use of computer programmes or electronic devices to alter or conceal sales records. To counteract these risks, legislation was enacted in 2011 providing penalties for the possession, use or supply of automated sales suppression devices known as "zappers" for the purpose of evading tax. Streetscape programmes, in which every cash business in an area is visited, without prior announcement, have been carried out. The main focus of real time activity is on businesses that have the potential to operate with cash. This includes professionals such as doctors, veterinary surgeons, etc. These operations have also resulted in the registration of previously unregistered persons. 803 such registrations were recorded in the period from January to the end of April 2012.

The results from all the various projects are reflected in the general audit and compliance results from audits, assurance checks, site visits etc. which are published in the Revenue Annual Report. Revenue does not measure the estimated loss to the Exchequer as a result of the black economy. Revenue does report annually on the results of its audit and compliance programmes. In 2011 the results of audit and assurance activities resulted in additional yield of €492.7m to the Exchequer.
Dáil Éireann Debate
Vol. 773 No. 2
Wednesday, 19 September 2012

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