Wednesday, 13 May 1987
Dáil Eireann Debate
An Ceann Comhairle: Deputy Barry Desmond has given me notice of his intention to raise on the Adjournment the subject matter of the waiver of health contributions from the farming community. We have a shortage of time. May I suggest that the Deputy take seven minutes and the Minister four. Is that satisfactory? Agreed.
Mr. Desmond: The total amount outstanding from farmers and collectable by the Revenue Commissioners now stands at £9.7 million. This is in respect of the years commencing 5 April 1985 and presumably to 5 April 1987, inclusive. The figure is suggested as an estimate. I was quite taken aback when I heard from the Minister for Finance in reply to a question raised by Deputy Wyse that the actual amount which is likely to be collected out of the £9.7 million is a derisory £2 million. I am concerned, and the House should be, that £7.7 million of health contributions for the years 1985-86 is effectively being written off prematurely on a questionable basis by the Revenue Commissioners. I should like to indicate the effect of a loss of Appropriations-in-Aid to the Health Vote of £7.7 million. If the Department of Health had the full £9.7 million in 1987, as they should have because that money is due — reminders have been sent to those concerned — it would provide pay and pensions and employer contributions for 1,000 health workers. It should be remembered that other sections of the community pay their health contributions on a weekly or monthly basis.
The Estimate of the Department of Health is made up on the basis of £10,000 per worker and if the amount outstanding was available there would not be any need to pay off 1,000 people employed by the health agencies or to cut services. That is the impact of the failure to collect those contributions. I am not satisfied about this matter. Only now, after two or three years, are the Revenue Commissioners indicating that because of overall limitations on staff resources they are commencing enforcement proceedings in the case of health contributions. That is not acceptable  particularly when one realises that revenue is urgently needed to keep essential public services in operation. The Government did not have any difficulty in writing off, in addition to that £7.7 million, a figure of £6 million in farm tax. Legislation has not gone through yet to deal with that issue and, hopefully, it will not go through. I hope the Government will revise their policy decision in that regard before the publication of the Finance Bill on 22 May.
We are faced with the position that a section of the community whose representatives through the IFA are simultaneously calling for a massive reduction in public expenditure are, in effect, having £6 million written-off in farm tax and a further £7.7 million due in health contributions waived by the Minister for Finance. That is something the rest of the community should feel irate about and it should be addressed by the Minister. If the Minister, who is responsible for the public service, could find 125 people for Jobsearch I am sure he could find 20 or 30 people in the public service to issue enforcement proceedings through the sheriff's office in respect of health contribution arrears. The Minister laid off 200 people in the farm classification office and I am sure he could have asked them to stay for a couple of months to collect the arrears of contributions. Those skilled persons, including a number who live in my constituency, are now drawing the dole. The money is due and there is no excuse for not collecting it. I may be regarded as being anti-farmer but I am not. As far as I am concerned we must all pay our due share of income tax and levies to maintain essential public services. A bitter lesson is being learned now in rural areas with county hospitals closing down and basic community care services being withdrawn because of the lack of financial resources for health boards. That arises because of the decision in regard to the farm tax and the failure to collect health contributions.
Were I a farmer and had seen over the years one Government being played  off against the next, and one party being played off against another with promises of amendments in the taxation system, I too would be tempted not to bother paying any taxes, including health contributions. As far as I know the only time farmers now pay will be under the regulations I brought in. If they go into hospital they will have to pay £100. They will have to pay when they are faced with the extremity of an emergency admission but that is not good bookkeeping, good taxation or good administration. I urge the Minister to remedy this as a matter of the utmost public importance.
Minister for Finance (Mr. MacSharry): I am delighted to have an opportunity tonight to dispel any misconceptions which may have arisen in this area and others. I am pleased to be able to say that what Deputy Desmond has said is totally untrue and misleading. There has been no write-off whatever of any tax liability. It is nonsense to say, as Deputy Desmond did, that £6 million has been written-off in respect of land tax. He is aware that another provision of the budget was a reduction in the VAT refund to farmers which yielded the same amount straightaway to the Exchequer. Let us deal with facts and not create banner headlines for emotional reasons.
As I indicated in the course of my reply to the question tabled by Deputy Wyse the health contributions due from full-time farmers are collectible by the health boards for years prior to the year ended 5 April, 1985. Contributions from full-time farmers for the year ended 5 April 1985 and subsequent years are collectible by the Revenue Commissioners as are contributions from part-time farmers for all years. Arrears of approximately £6 million are due to the health boards from farmers and these are being pursued by the boards.
I also indicated in my reply yesterday that there was a total balance outstanding of £9.7 million in respect of farmers' health contributions which are collectible by the Revenue Commissioners. I emphasised that the figure of £9.7 million was no more than an estimate and on the  basis of previous experience the amount will be subject to downward revision on closer examination, on appeal, and for various other reasons and the figure will change accordingly. In fact, a large part of contributions outstanding relate to cases where income tax is under appeal, that amount of the £9.7 million being £4.5 million. Late appeals may be received in other cases. The Revenue Commissioners estimate that these factors and such collection difficulties as those arising from the financial position of some farmers will result in an actual collection of £2 million out of the total balance outstanding of £9.7 million. I should also like to stress that £2.5 million has been paid by farmers in health contributions. I wish to emphasise, as strongly as possible, that the difference between the balance outstanding and the expected yield is due primarily to factors such as the amounts being reduced on appeal and is not, as has been alleged, as a result of a decision not to pursue these arrears from farmers.
I should also emphasise that arrears of health contributions from farmers are only a very tiny fraction of the total tax to be collected at any given time. It is perfectly sound administrative practice on the part of the Revenue Commissioners, and common business sense, to deploy resources towards the collection and enforcement of the various taxes in a way which reflects the scale of the arrears in the context of all arrears of tax. This practice was, of course, followed by the Revenue Commissioners during the previous administration, during the course of which collection responsibility for health contributions for full-time farmers was transferred to the Revenue and at a time when that administration was reducing the staff at the Revenue Commissioners. All the facts should be put on the table.
 I accept there is scope for improvements in the collection and enforcement of health contributions. There is always scope for improvement. The question is, of course, a simple pragmatic one: what resources are required and what extra tax would be collected as a result.
Improved enforcement also will require that the existing enforcement agencies will have to experience some relief from the heavy burden of the very large numbers of income tax and VAT cases which they have to handle at present. There are prospects that the appointment of 12 Revenue sheriffs last year and the operation of the tax clearance certificate scheme in relation to public contracts and grants will make a contribution towards this and that the enforcement agencies, sheriffs and solicitors, will have the capacity to take on health contributions.
I can assure the House that the Government will take all possible steps to bring about a situation where more effective enforcement of health contributions will be effected. To this end I am asking the Revenue Commissioners to review their present operations in this area to see if a speedy improvement can be instituted and what cost-effective changes can be made.
The collection and enforcement of health contributions is not as satisfactory as I would wish. On the other hand, statements about £7 million of contributions not being pursued are grossly exaggerated and totally untrue. I am reviewing the present position to see what further improvements can be made and whether these would be cost-effective.
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