Committee Reports > List of Committees > Dáil > 1975 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1972 - 1973

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 10 Aibreán, 1975.

Thursday, 10th April, 1975.

The Committee met at 11 a.m.

DEPUTY de VALERA in the chair.

Mr. M. Jacob (thar ceann an Ard-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 17—STATIONERY OFFICE.

Mr. J. F. Harman called and examined.

512. Chairman.—There is no comment from the Comptroller and Auditor General. We will take the Vote. On subhead F—Office Machinery and other Office Supplies—we did have questions on that last year but I think the answers given to the Committee were satisfactory. Is the Comptroller and Auditor General satisfied?

Mr. Jacob.—I think the Committee have reported on it.

513. Chairman.—On Appropriations in Aid —Sales of publications—I presume that increased sales of publications may be a reflection of price increases rather than volume increases?

—No. Actually it is the other way around. It is an increase in volume.

That is satisfactory.

514. Deputy Bermingham.—On supplies and services provided on repayment—would this be for other Departments?

—For certain ones from whom we get repayments, yes. Ordinarily we do not get repayments. We give a free service. But we charge for services for the Social Insurance Fund, An Gúm, some Army schools, comprehensive schools and others.

515. Deputy Griffin.—Do the Stationery Office do all their own printing or contract out work?

—We do not do our own printing. It is all contracted out.

You look for tenders in the normal way?

—The normal thing is either a group contract or in certain special cases just a few tenders for an individual job.

516. Chairman.—There are certain traditional continuing contracts?

—Yes.

517. Deputy Griffin.—Would it pay the Stationery Office in the long run to have its own printing works, or has that never arisen?

—It has been considered at times. There has never been an intensive study done on it but there is the point that the work varies from time to time during the year and a fair amount of work can be taken by the miscellaneous contractors. On balance the feeling has been that it is more economic to do it in the present way through contract.

518. Deputy Bermingham.—Do you have good competition in this?

—Yes, we have good competition. In recent times it has become even more keen, as one would expect.

The witness withdrew.

VOTE 7—OFFICE OF THE REVENUE COMMISSIONERS.

Mr. J. C. Duignan called and examined.

519. Chairman.—Members have all seen this memorandum* from the Revenue Commissioners on problems in relation to tax collection which the Committee asked for last year. It is a report well worth reading and as usual there is frankness and straightforwardness about this Office that is very welcome.

—Thank you.

520. Paragraph 13 of the Report of the Comptroller and Auditor General reads:

“Revenue Account

A test examination of the Revenue Account has been carried out with satisfactory results.”

Mr. Jacob.—This paragraph reports on the result of our examination of the Revenue Accounts.

521. Chairman.—Paragraphs 14 to 17 of the Report of the Comptroller and Auditor General read:

“The budget estimates of Revenue for 1972-73 and the net yield for the years 1972-73 and 1971-72 under its main heads are shown in the following statement:

£539,851,000 was paid into the Exchequer during the year leaving a balance of £1,188,151 as compared with £861,844 at the end of the previous financial year.

I have been furnished with the following analysis of amounts of income tax, sur-tax and corporation profits tax outstanding:—

Comparative totals for the previous year are Income tax, £19,696,911; Sur-tax, £3,354,344; Corporation Profits tax, £4,396,787.

Extra-Statutory Repayments of Customs and other Duties

Extra-statutory repayments of Customs duties, £21,070, Excise duties, £28,090, Turnover tax, £260, Value-Added tax, £24 and Stamp duties, £1,080, were made during the year.

Remissions and Amounts Irrecoverable

I have been furnished with schedules of the cases involving a loss of £100 or upwards in which claims for duty under the Revenue Acts were remitted without statutory authority or passed as irrecoverable during the year ended 31st March, 1973. The total amount of the items included in the schedules, £143,481, is made up as follows:

The distribution according to the grounds of remission or write-off is:—

I have made a test examination of the items included in the schedules with satisfactory results.”

Mr. Jacob.—Paragraphs 14 to 17 tabulate financial details for the information of the Committee. I have no further comment to make on them.

Chairman.—On what basis do you select this for information?

Mr. Jacob.—We feel that the Committee like to see the details of the budget estimates under the various heads and the net yield, in other words, the outturn at the end of the year under those heads, and then we give a comparative statement showing the outturn of the previous year.

522. Chairman.—The Accounting Officer’s memorandum, to which I referred at the outset, regarding the problems in relation to tax collection is relevant to this matter. I should like to say again that it is typical of the clarity and the frankness we have been used to from the Office of the Revenue Commissioners and I found it a very helpful and interesting document. Certainly that document taken with these figures is very illuminating.

—I appreciate very much your interest in our position. You have afforded us an opportunity, at this stage, of not merely looking at 1972-73 but of just illustrating how far the volume of our work is increasing. In fact, as you can see there, the net yield of revenue for 1972-73 was £540 million whereas for 1975 the estimate of the amount to be collected is as high at £976 million. We are facing the situation in which under all heads we have to collect very much larger sums. The memorandum was directed towards the problems principally relating to income tax, corporation profits tax and valueadded tax because it is in relation to those taxes that we have to go after individual taxpayers. They are direct taxes, although, perhaps, the value-added tax could also be considered as an indirect tax because it falls on the ultimate consumer but as it has to be collected at the various points down to retail level it has the attributes of a direct tax. The Customs and Excise duties are collected in bulk. They are indirect taxes and are collected either at the point of importation or at clearance of goods from warehouses. In relation to income tax and value-added tax we certainly have been facing great difficulties in recent years because of the unsatisfactory liquidity position with which many companies find themselves faced. It means that we have to follow up the outstanding cases much more sternly than was done in the past. Sometimes a company may find that it is at a limit with the bank and if it has not made adequate provision it has great difficulty in paying its tax. We take the line that so far as PAYE is concerned that that is tax which a company has deducted from its employees. To give such employers any leeway would undermine the whole situation of the Revenue Commissioners and, therefore, we take a very serious view of any concern that diverts the PAYE to company use or the use of a proprietor. The same thing applies with regard to the value-added tax because that is tax that has been passed on in the customer’s price for the commodity purchased. We take a very serious view of failure to pay those taxes but even with the line adopted we have great difficulty in collecting in some cases. Our two main lines of collection for those taxes are the use of the county registrars or sheriffs, and the courts.

Deputy Bermingham.—Which courts?

—There is a limit as to how far one can impose on the courts because it is a slower and a more costly procedure for the taxpayer. The ideal thing would be that taxpayers would appreciate that the tax has got to be paid and that they have got to make provision for it. The fact that the rate of interest charged by the Revenue was lower than the commercial rate in force often tempted some taxpayers to divert the money to other use and to defer payment as long as they could. The rate of interest has now been brought fully up to the commercial rate—it is 1½ per cent per month for tax in arrears—and it is felt that that should prove an adequate disincentive bearing in mind that it is not allowed as a deduction for tax purposes, whereas, of course, commercial interest is. Even so, I should stress that we are having great difficulty in the collection of tax. It is also imposing a heavy burden on the county registrars who are doing a very useful job on behalf of the State in collecting tax— and also, of course, a heavy burden on our own resources in the first instance namely the Collector General and then the Revenue Solicitor.

523. Chairman.—This is, strictly speaking, the aspect of the matter that we are concerned with, your capacity to do your job. Last year when the Committee made this point, our interest was to try to help you as far as possible to head off a position where you might have the type of problem the Comptroller and Auditor General might be commenting on in later years. It was to try to head off the difficulties there we were directly concerned. Would I be correct in saying that a near crisis, so to speak, has been precipitated for you in your normal procedures by a combination of factors? First of all, you have inflation which meant two things: that the amount of money concerned was greater and secondly, that through the movement of people into the tax net, if I may call it, from the exempted areas the burden of work which falls in assessment and collections has increased very significantly. Thirdly, as you stressed, that in an inflationary and depressive situation there are acute problems of collection arising from a combination of people trying to evade payment, not in a fraudulent sense which we were used to in steady times, but more from the point of view of delaying payment or not being quite in the position to make the payment at once. Take the PAYE situation, to which I think your attitude is completely correct. The money has been collected for you and not to be used as working capital, but that provides you with an additional problem. Then there have been impositions on you from, say, health services. I do not know whether there are any social service impositions on you but there is certainly the health service. That is a further complication. On top of all that you have been faced, as a number of us have been in our own businesses, with the changes in the mechanics of accounting nowadays, computerisation and so on. I think the Committee realise all these factors must have caused you particular problems seeing that you must work within an annual period. Whatever about paper elsewhere, you must furnish the cash. If I am right in that approach—and this is my first question —does this not mean that you would have to expand the resources of your department, your personnel, or is that a false assumption?

—Thank you, Mr. Chairman. You have certainly fully covered the problem with which we are faced. There is not merely the matter of collecting larger sums from existing well established businesses, which themselves are experiencing problems of liquidity that they had not to face before, and collecting from the additional number of taxpayers coming in because of the higher paper incomes which arise from inflation, but also the new areas which we are entering into like the farmers, the pay-related contributions——

That is what I meant by extending the net— ——and the health services. When one is dealing with people who have not paid tax before, it takes a while to get them to realise that tax has to be paid promptly. There is a particular difficulty about the health contributions because the amount is so small that, even if feasible, it would cost more to take action for each individual item. So we will have to wait to get a certain number of items together. In relation to PAYE and value-added tax, if the Revenue were to pursue defaulters month by month, in the smaller cases, the amount collected would not be sufficient to cover the costs. Therefore, we have to adopt the practice of following the large cases immediately the tax is due, while in the smaller ones the Collector-General waits and accumulates a few months at a time. Where the tax is not paid the Revenue charge interest as well.

524. Two things you have raised: first of all, the collection and administrative costs, which, to some extent, although it does not matter to the immediate accounting of the revenue you collect, still the net result to the State is important. If it is going to cost you more to collect so much, then the net return to the Exchequer is diminished. That is one point that is concerning us here. On the other hand, you must have the necessary facilities. You mentioned another matter and I would like to ask how significant it is for your returns. We have passed from the year 1970 to the years 1972 and 1973 when company profits were running at a high level at the peak of the inflation. In 1974, by and large, company profits have been very much reduced. I am talking of an area I know about. The reduction would be of the order of 75 per cent. This, of course, is reflected in your direct company taxation. Would you consider that a significant factor in depressing the amount that you are actually putting into the Exchequer?

—That has been provided for in the Estimates. In fact, there is a statutory provision whereby relief is given to companies for the excess cost of the stock they have to carry. Of course, PAYE and VAT are really the big problems. It is generally true to say that for most companies with which we are having difficulty, it is not so much their own tax liability that is involved as making sure that the tax that they have deducted on behalf of the Revenue from employees and customers reaches the Exchequer.

The answer to my question is that direct company taxation is a relatively minor problem in your perspective.

—That is so. The reason is that the companies are inclined, when they get into difficulties, to delay paying the VAT and PAYE, which, in the case of a large concern, even for a few months, can be quite a substantial sum. You mentioned the question of staffing and so on. The Committee were kind enough to take an interest in our computer. We have a large computer installation which has made possible considerable economies in administration, and we are at present introducing a new system which is very up to date whereby the tax districts in the country can have direct access to the computer in Dublin. Therefore, instead of having to make amendments to assessments by documents sent through the post, alterations can be carried out directly and instantly in the books of the Collector-General by the local tax offices.

525. But this is all under assessments. The computer cannot get up and walk after the individual defaulting taxpayer.

—No, but it means amendments can be made very promptly and followed up much more quickly than by correspondence, especially where there would be an appeal or where there would be a question of adjustment of a taxpayer’s liability. Heretofore, one had to advise an amendment in manuscript. This took time, maybe a matter of a week or more. Now the officer dealing with it can, where he has the relevant authority, make the amendment on the drum in the computer. That means that the amended notices of tax-free allowances can go out practically the same day, whereas in the past there might have been a delay of three weeks or so. So that is speeding up action substantially.

We are very grateful—and I am extremely interested in this—for the frank, straightforward and informative report you have given us, but we have to realise that this Committee will be charged only with the events of 1972-73. We must stick to our last, and what we are anxious to do is to see how you are at the present moment, because we anticipate very serious burdens being imposed upon you in the near future. I can see that there are some serious problems going to arise for your Office here. If we can do anything to help to lay the ground for smooth work, the Committee would like to help in that. I do not think there is anything in the nature of serious criticisms of the Office coming from the Committee.

526. Deputy Bermingham.—In relation to value-added tax, there are some small businesses which come into the scope of this tax?

—Yes, that is so.

Because of inflation and rising prices you are now bringing in very small businesses that will have to operate the value-added tax?

—That is so.

There is a limit on turnover, I think.

—Yes, that is so.

There is a limit of turnover under which you need not make any returns and you pay on your purchases. Now, with inflation, those purchases would increase in value?

—Yes.

A person doing a very small business would find himself within the net of value-added tax?

—Yes. I think one must appreciate at first that, as far as value-added tax is concerned, as a registered person one is really paying tax only on one’s own value added, so that even though the small traders were not registered for VAT and did not therefore make returns, they were, in fact, bearing VAT in that they bought their goods subject to tax and furthermore they did not get any credit for any business expenditure they might have themselves on items which would have borne turnover tax. For instance, a trader who might buy say, a weighing scales would be taxed on that and if he were registered he would get credit for it.

527. I appreciate that but the point I want to make, if I may, is that now with inflation a lot of those traders who were exempt are now coming into the net and they are not prepared for that. Do you find that?

—Yes. I think that is so. However, the limits set in this country for exemption from value-added tax are very generous. Compared with Europe generally they are very much higher than in other countries. The Revenue do not watch a case and immediately say “You must register when you exceed the limit”. They must be consistently above the limits allowed for a period before the question of registration would be raised.

528. It is apparent, though, that with the increase in prices and inflation that there will be a large number coming in now that were not in before?

—That is true. I think that the fact that foodstuffs are exempt from value-added tax means that the bulk of traders for whom foodstuffs constitute a major part of their sales are not in the value-added tax bracket at all. I think that it is not a problem for most of the small traders. The exemption for certain types of services has always been comparatively low especially where the value added is high. In a hairdressing business, where the receipts are nearly all “value added” the exemption is justifiably quite low. It would be wrong that a small trader could get away with not paying any tax and a person who had a larger establishment with a number of employees in a similar line of business would be liable. Accordingly, for services where the element of value added is high the exemption is low. There are different levels of exemption but for concerns where the minimum rate of value-added tax applies and the rate of profit is comparatively low there is a high limit of exemption. But by the standards elsewhere our exemptions are very fairly graded and particularly now that foodstuffs are excluded the problem which you mentioned of new cases coming in does not cause hardship. They have to keep accounts for income tax. We regard the value-added tax as a very useful part of the tax system because the inspectors are able to verify the figures for VAT against the figures returned for income tax. When a trader reaches the stage that he is liable for value-added tax that very often also raises questions concerning liability to income tax. We regard the two taxes as complementary. A trader liable to VAT would normally have to keep accounts for income tax purposes also.

I accept the position.

529. Deputy MacSharry.—In regard to the discussion earlier the question of staff in the office of the Revenue Commissioners, how much have pay-related contributions and the health contributions contributed to the problem?

—We collect the pay-related contributions on the computer in conjunction with the PAYE. Therefore, for traders who were already liable under PAYE the additional work is not very substantial, but where a trader has a number of staff and where there is no liability to PAYE, because the employees’ tax-free allowances exceed their pay, the only item the Revenue collects is the pay-related contributions. That is a troublesome case because obviously we have to go through all the processes even though there may be no tax liability.

530. What about the farmers and health contributions?

—That is not the type of thing that I have in mind. The farmers are just coming into the tax net now for the first time.

They have to be registered?

—We have to register any farmer who has employees. After the farmers are registered for income tax, they will be served with returns. These are just the farmers with valuations of £100 or more. Then there are other cases as well. A man or his wife may be an employee as well as being a farmer. For him there is a lower limit. In regard to the point you have raised about the pay-related deductions, farmers constitute one of the sectors where collection problems may be acute. They are sometimes in remote areas. When I mention the problem of recovery, what is done in these types of cases is to wait until the total arrears are sufficiently significant to send them to the County Registrar for collection. In other words, the Collector General does not go after them month by month or even year by year in some cases. If there is only £7 in health contribution, we wait until we get a sum that is worth pursuing. The Revenue have in fact notified the Department of Health about the cases in which the health contributions have not been paid. It is a problem which we are just looking at right now to see what should be done, that is, where small amounts have not been paid.

531. The health contribution is collected by you and registered by you and the health boards are also involved in this collection and the actual returns from these contributions. Would it not be better just to have one body involved? Many of these people applying for medical cards are outside the health contributions scheme.

—One has to look at the overall position, which is that most of the employees will be in employment with concerns which would also be operating PAYE and the Revenue is able to get in the bulk of the tax in a straightforward way. The cases where difficulties occur, while they may be numerous, only constitute a small proportion of the total number.

532. That is exactly it. The health contributions are paid so much on the stamp, first of all, and the bulk is paid through the social welfare contributions not through you. Then there is the £7.

—I think it was because of the difficulty of collection through the other Departments that the onus of operating these schemes was imposed on the Revenue Commissioners. It is no secret to say that the Revenue were not very keen on taking this on but, taking the overall position of the various Government Departments concerned, the view was taken by the authorities that the most effective collection method would be to have it operated by the Revenue Commissioners.

You said you examined it?

—Yes.

533. I myself get a claim for a health contribution. I get these reminders and all the rest. The first time I got it I was going to pay it. They would not accept that. I would love to pay it and get the benefits that go with it.

—Who would not accept it?

The health board.

—Yes, but you did get an application from the—

All I got was this bill for the health contribution.

—From the Revenue Commissioners?

I do not know where it comes from.

—Then why would you not pay it to the people from whom you get it?

I am not eligible to pay it.

—This is a voluntary contribution.

There are thousands of people like me. That is why I am saying there is a great deal of duplication.

—I am not sure who is issuing them.

534. Chairman.—A little bit of difficulty arises in this way, that the question of eligibility for the benefits rests with the Health Department, is that not right? They do not take you on. On the other hand, Revenue have a general mandate: everybody who is in the net gets one. What is happening here is that possibly the computer is sending out the demand before the other side will commit itself to the liability.

—It must mean that somebody has applied who is not eligible. This scheme is for the self-employed.

I think there is some confusion here.

Deputy MacSharry.—Registered land-owners?

Deputy Bermingham.—Yes.

—That is right.

But a registered landowner, if he is under £60 valuation, gets one direct from the health board without reference to you?

Deputy MacSharry.—That is right. He does not have to pay for it at all.

Deputy Bermingham.—You do not come into this at all? The Revenue Commissioners do not concern themselves with this either way.

—No. The only time we come into the scheme is where a self-employed person has registered with us and is entitled to register, under the Health Act, we collect that £7. That is not what you are referring to, as I understand it.

535. Deputy MacSharry.—What I am referring to is the enormous duplication in what I consider to be the collection of a very small sum.

Deputy Bermingham.—The duplication occurs because anybody registered on the county council books under £60 valuation gets one of these from the health boards. The Revenue Commissioners do not come into that scheme. If a person is self-employed in some other field besides agriculture, then if he wants to apply for registration he must go to the Revenue Commissioners because he would then be liable for income tax.

—That is right. But such a person would not be registered with the county council, so I am not quite clear how duplication would arise.

536. Deputy MacSharry.—In the overall scheme your Office, the health boards and the Department of Social Welfare are all dealing with the same matter. One deals with the stamp, the second deals with farmers with registered land under £60 valuation and the third deals with the self-employed. In my opinion, the amount of money accruing from the overall scheme is not worthwhile.

Deputy Bermingham.—I agree with Deputy MacSharry but the reason is obvious because only your assessment of the man’s income will be accepted by the health board in the case of the self-employed who is not a farmer.

Chairman.—The most helpful thing would be if Deputy MacSharry would state the specific case. It does not matter to whom it relates. At the beginning he mentioned a specific instance.

Deputy MacSharry.—It has been explained.

Chairman.—If you put the specific case on record I think it would be more helpful. The general statement which the Deputy has made is of importance.

Deputy MacSharry.—I shall just give an example relating to the time the scheme started. The health boards then initiated lists of people under £60 valuation with registered land. Each one of those people got a bill for £7. Quite a number of those people have since got medical cards and therefore are outside the scheme. The argument is not one of a specific case—at the time of its introduction I made this point and it is still valid—but of three different Departments dealing with the scheme which is one of the smaller schemes operated by the Revenue Commissioners. I am making the point in relation to problems of staffing and extra provisions.

Chairman.—But I understood you to make the point that you or somebody else had been billed in connection with a scheme in which there was no liability.

Deputy MacSharry.—Where a farmer with registered land is already billed by the health board.

Chairman.—As far as the Revenue Commissioners are concerned, is it being billed by them?

Deputy MacSharry.—No.

Chairman.—It does not concern us.

Deputy MacSharry.—It does in so far as the Revenue Commissioners are involved also in the collection of health contributions.

Chairman.—The Deputy’s point is that there are other agencies concerned as well?

Deputy MacSharry.—I was trying to help offload this burden.

—It was imposed on us, not because we wanted it, but because it was felt that it would be easier and less costly that way.

537. Deputy H. Gibbons.—There is the case that the person who is employed also owns land and—

Chairman.—If in fact he was registered as a self-employed person as well; a man might be a landowner, a farmer or a businessman. He might have asked to register with the Revenue Commissioners as a businessman who is self-employed. In fact some of those people are working for another employer. I am sure the Revenue Commissioners have quite a number of those people.

Deputy MacSharry.—Still he might be caught three times?

—Yes, but he would have taken the initiative himself. It is like the case of a person insuring himself with two or three companies. He is paying unnecessarily if he is eligible under one scheme and he has applied under the other. As far as the Revenue Commissioners are concerned, the only persons registered for the health services are those who applied to us. Advertisements were put in the newspapers at the request of the Department of Health when the register was set up.

538. He might be on your register and now he has become employed and he is contributing with a stamp. If you are sending him bills all the time and then perhaps institute proceedings against him when he is in fact paying under a stamp because he is working for somebody else, this is where all the duplication will occur.

—The position would have been quite simple if, when he became employed—and received a demand for payment from the Revenue Commissioners—he simply told us so.

539. Deputy H. Gibbons.—There is another point I would like to mention. The documentation is very difficult to understand. When interest becomes due instead of sticking on a stamp if it was stated that interest is due from a certain date this would get the message across. I know cases where it has not got across.

Chairman.—Are we still speaking about the Health Act?

Deputy H. Gibbons.—No. I am talking about the duplication and the difficulties which are increased by the failure to collect the first time on the assessment.

—So far as the Health Act contributions are concerned the Revenue position is that under the scheme we were asked to collect the contributions in respect of the self-employed. Notices were put in the paper inviting people to register. We send out demands but we do not take proceedings against people for non-payment of Health Act contributions. We notify the Department of Health. We follow it up through the ordinary procedures as far as we can. When they fail to pay we notify the Department of Health. The operations we carry out are not a major cost in our organisation—that is, in relation to the health contributions. We do not charge interest on outstanding health contributions.

540. Deputy MacSharry.—In actual fact there has never been a case tried or pursued from the health board side or Revenue side?

—No. We simply notify the Department of Health that these people have not paid. The number of people who have not paid would be in the region of 6 or 7 per cent. We have notified their names to the Department of Health. It is one of the matters we are attending to at the moment.

541. Could I ask another question? Why has a small contractor who builds houses for the county council such difficulty in obtaining a tax certificate?

—Are you speaking of certificates for sub-contractors?

Yes. I will give you an example. There is tremendous difficulty in many local authorities in getting people to build these so-called specific instance cottages. Young people are encouraged to get together to do one big contract at a price of say £5,500. There is then a cheque from the county council and one-third of it is stopped. They go to the tax people and cannot get a certificate. Why is that?

—The answer is this. One of the major sources of tax avoidance in every country is in relation to the construction industry. We had cases where groups of tradesmen got together. They were what are called “lumpers”. They were perhaps plasterers, or carpenters and they offered their services to a contractor who was working on a scheme and in one case they were paid over £100,000. They claimed they were sub-contractors not employees. We did not get a penny tax on that. We introduced a scheme to meet that situation. The law provides now that where a person is a sub-contractor if all he is giving is his labour he must be registered as a PAYE man, which is what he is. He is posing as a sub-contractor, whereas, in fact, he is an employee being paid a proportion of the profit as remuneration.

542. I am talking about contractors. They tender for houses. They are not employees.

—If a man is a sub-contractor he is entitled to a certificate. It is a question of whether it is established that he is a sub-contractor.

543. How does he establish that?

—If he has an established place of business, if he is producing accounts to the inspector showing that he has been buying materials and carrying out construction work, there would be no question of denying him a certificate. If, on the other hand, the man says he is a contractor and that he gets employees for a main contractor, who will do all the work and may buy the material as they need it, then the Revenue would not be disposed to give him a certificate. What he is endeavouring to do is to evade paying tax as a contractor or as a PAYE employee. The amount of tax lost prior to the introduction of the provision in question was in the order of £3 million a year. It might be up to £8 or £10 million a year now if we were not to operate the system rigidly. Any genuine contractor who has a registered place of business and who can show the inspector that he buys materials for construction purposes that he has tendered for the building of houses and is, in fact, operating as a contractor, will have no difficulty in obtaining a certificate.

544. When he does that and the county council have given him a job is that not sufficient for the Revenue Commissioners or do they say: “No we will not give it to you unless you produce audited accounts for the previous year?” The man might not have been in business the previous year.

—No. The county council may have schemes where they employ direct labour. If a man applies for a contract and gives an undertaking that he will produce accounts at the end of a period he would be given a certificate.

If he gives an undertaking at the end of the period?

—No. If he gives an undertaking when he is getting the certificate that he is going to make up his accounts to a certain date and that he will produce accounts at the end of that period, the inspector would then give him a certificate. He would be looking for accounts at the end of the period. If the individual failed to produce the accounts we would not renew the certificate when he applied again.

545. Deputy C. Murphy.—There seems to be a great increase in the number of people who applied for renewals of certificates and where certificates were withdrawn.

—Yes. What happened initially was that—

Everybody was allowed in?

—Yes. People undertook to give us accounts and failed to do so. We then said unless they were able to prove they were genuine contractors keeping accounts they would not get a certificate the next time.

546. Would you have any idea of the number of people who had certificates withdrawn last year?

—I would not be able to answer that question. I do not think the number would be readily available. It is part of the ordinary administration of the Office that if a person has given an undertaking to produce accounts and fails to do so we must go after the tax. We then say they will not get a certificate for next year unless the accounts are produced for the previous years.

Thank you for that information. It appeared to me from the people who came to me that there was an increase this year.

—It simply means the people who come to the Deputy had given an undertaking. If a certificate has been withdrawn it means the individual got it wrongly or failed to produce accounts. The people involved are mainly plasterers, bricklayers, carpenters and so on. It is quite a common thing for a bricklayer, a carpenter or a plasterer to say he is a contractor. In fact, he may be working for a building contractor and may have no place of business. He may be working purely as an employee or as a man who buys the material as he is using it. The inspector would be slow about giving a certificate in a case like that unless he was getting accounts from him for the period in which the undertaking was given in the first place.

547. That is a very good and detailed explanation. I can recall one case in which I had some dealings with the Revenue Commissioners and they simply gave two requirements: one was a recognised place for work, and I cannot recall the other offhand. They did not explain it all in detail as you have done. Perhaps you might have a look at those circulars you send out because they seem to be a standard reply.

—I get about 50 letters a day from people about different aspects of tax. That is one of the matters on which I get letters quite frequently. I look into those cases. The object of the legislation is to make sure the Revenue get the tax either under Schedule D in the case of a contractor or sub-contractor or under PAYE in the case of an employee. The nearer the nature of the man’s work is to employment rather than business, naturally the slower the inspector is about giving a certificate. If a man has an established place of business in which he keeps materials, if he can show that he has tendered for contracts and has produced accounts in the past, he gets a certificate automatically. If, however, he has never paid tax or is paying tax as an employee, the inspector would be slower to give him a certificate. He would want to make sure that the man is, in fact, a contractor and not operating under the guise of a contractor although still virtually an employee. We have operated this system stringently or we would get no tax at all from these people. Very often they earn very substantial sums. If anybody has cases where there is doubt about what has been done, I will look into them.

548. Chairman.—In these cases, what is the connection with the Departments of Social Welfare and Health? These people would be avoiding stamping cards?

—They would be avoiding everything. The type of people we found were single men who, say, would work as a group in Cork. They would then move to Wexford and, perhaps, Dublin. They take on big contracts; one man would get a very substantial amount of money which he would divide out among the others. By the time the Revenue would have him followed up he would have moved on somewhere else. As a result the State would lose the money.

I think that was not confined to this country. Is it a very extensive problem?

—Yes.

549. Deputy MacSharry.—While all of us can agree—and it is not because you are here we are saying this; it is a fact—that the explanations and the detailed way answers are given not only here but if any of us have occasion to contact any of the Commissioners or the Inspector General are satisfactory, could the same thing not filter down to the tax men on the spot? All of us have difficulty in getting the explanations you so readily give here. I would like to make a comment on the attitude of people involved in customs and excise in relation to using the wrong diesel. In recent times they stop somebody on the road, seize the lot and charge up to £1,000 before it is released. What law provides for that kind of seizure?

—You are speaking about the seizure of a lorry with smuggled goods?

No. I am speaking about a lorry which never crossed the Border and which somebody has suspected is using red diesel. The truck is impounded and £1,000 tax put on it which must be paid before the truck is released.

—In the first question you say a person is suspected of using red diesel. They would not seize it unless they could establish that red diesel was being used. They would have dipped the tank and found it contained red diesel. The use of red diesel in motor vehicles is an area in which there is very substantial fraud on the Exchequer and very substantial loss to the Revenue, particularly now with the very high tax on fuel. Any case where £1,000 would have been demanded would be one where there was very serious fraud involving, perhaps, the construction of a secret tank. The cases I have investigated in which substantial fines were imposed were ones in which, if the ordinary tank were dipped, you would find it contained ordinary diesel but the vehicle also had a secret tank built in a hidden part with the deliberate object of fraud on a continuous scale. The case may be made that a person ran out of ordinary diesel.

Chairman.—A person with a secret tank provides against such a contingency arising.

—Yes.

550. Deputy MacSharry.—I understand the position. I am not trying to validate their case. I will give you an example. A truck and trailer was seized at Mullingar. It was found to have red diesel. The truck would not be released before £1,500 was paid. I contacted the Revenue Commissioners who arranged a discussion with the individual concerned and £1,000 was agreed as a price. I pursued the matter further by correspondence and the price was further reduced by £250. The price was now down to £750 as against £1,500 in the beginning. A court case is pending. I think that action was rather harsh. There were two reductions in the price.

—I think it must have been a serious case. It must have been a very valuable lorry.

It was just one man with one lorry and trailer drawing cattle.

—I would be very happy to look into the facts of the case. It must have been a very big lorry. This was not just a small trader, I am quite sure. It must have been a large concern.

It was just one man with one lorry and trailer drawing cattle to and from Sligo.

—Yes. I would be very happy to look into the facts of the case if you would like to give them to me.

551. All I can say is first it was £1,500 then it was reduced to £1,000 and further, in pursuance of correspondence another cheque for £250 was given back and the £750 was held pending proceedings.

—I do not know what the value of the lorry was.

It would have been £10,000 to £15,000 between lorry and trailer.

—It may have been that the man was in a difficulty. I do not know the circumstances.

552. Chairman.—Surely you have to watch your legal position here. In spite of all the legal powers you have been given—I am sure you do not want half the powers you have to have— you still have not, so to speak, the powers required. Am I right? Is it not your position here that when you make a seizure like this you are somewhat in the position of a policeman who makes an arrest. Your problem here is that, like the policeman, though he has a regular bail procedure where he can hold a man in arrest, you are really arresting that lorry and instead of having your bail procedure determined by a district justice or somebody else you are empowered to arrange your own bail. Is not that really what you are doing and not putting on a penalty?

—That is so.

Then the actual offence, the liability and the fine, it is a matter for the court afterwards. Is that right?

—That is precisely the position.

You are not being judge and jury. You are being policeman, if you do not mind my putting it that way.

—That is precisely the position. The figure which the Revenue would have mentioned would be the figure for which they would have been prepared to release the lorry pending consideration. The lorry would be seized by a local official who would submit that case to the authorities in the Castle. They would look at it and decide what they would be prepared to settle for without going to the courts. Initially the man who would seize it would be prepared to release it on payment of what he considered would be the penalty that would protect it if proceedings were to be taken. On receipt of the full information, the Revenue might be prepared to compromise for a lower figure.

553. May I, in the form of question, pursue the analogy and please then say where the analogy is wrong. It is important for people outside who do not understand it. Taking the analogy with a crime, the revenue officer on the spot is virtually in the position of a constable arresting.

Deputy MacSharry.—He has to get the Garda.

Chairman.—No. His seizure of the vehicle is parallel to the duty of a constable. I am not saying Gardaí—I am talking of police arresting an individual. When either of those two events occurs there is the question of either staying in arrest or getting bail. In the case of the constable the man would be brought before a justice or a peace commissioner and there would be bail. In the case of the Revenue Commissioners the constable, so to speak, is entitled to estimate the bail and to release if he gets the bail, and that is the amount in the first instance. Then the matter goes into the judicial field. In the case of the individual with the police, it would be dealt with in the Circuit Court with appeal thereafter if necessary. In your case you have your own special court, which is yourself in the first instance. The court of original jurisdiction is the Castle but that is a very distinct matter from the officer acting as a constable. Afterwards there are appeals from you if necessary. Is that analogy and procedure correct?

—The first thing I would like to say—you have put it very clearly—is that the man on the spot has detected a case but he does not know what the history of the case is. The lorry owner may have had three or four previous offences in completely different areas and the man on the spot must ask for what he considers to be a sum that will cover the worst circumstances. He has found an individual committing an offence, which is a very serious one, undermining the whole purpose of what is a very heavy revenue charge, the tax on fuel. For all he knows the lorry owner may have done this half-a-dozen times before and he must set the figure for which he will release the lorry at something which will be adequate.

554. Is he not exactly the same, he is not only constable, he is also district justice or peace commissioner assessing the bail? Is that his right?

—Before he releases the lorry he wants to look for something which will be adequate if the circumstances are really bad.

And if the lorry disappears in the meantime.

—Exactly. One of the points made by the Deputy is why is it that later on the figure may be reduced. The explanation is that the officer who asks for it first does not know the full facts. He knows only the facts of what he has got before him but he does not know the previous history of the case until it goes to head office and they look at the files to see if the owner has been in the same sort of trouble before. Many of these people are pursuing a deliberate course of fraud. We take a very serious view of that and usually take court proceedings.

555. Deputy MacSharry.—That is the point. Why not go to the courts?

—We do.

You talk about bail. It is a signed document. No money passes hands. This is actual cash across the counter there and then before you get your goods.

Deputy H. Gibbons.—May I make a point here? May I suggest that this is a question of policy because the Revenue Commissioners are operating a system handed down to them by the Oireachtas. Listening to Deputy MacSharry one would feel in the context of Supreme Court judgments in recent years that the Revenue personnel would have the obligation to bring that person before a peace commissioner or Garda and then extract payment in the same circumstances as the courts.

Chairman.—It is beyond us here.

556. Deputy MacSharry.—I accept the law backs it up but not to the extent of the amounts of money.

—The amount of money asked for the release of a vehicle is not related to the penalty which could be imposed by the court.

Have you seen many penalties of £1,500?

—No, but the law would provide a penalty and in addition the Commissioners would have power to forfeit the vehicle.

The majority of fines you see in courts are £100.

—It depends on the facts. There are many offences for which the maximum penalty imposed by the courts is £100.

Chairman.—May I, in order to keep the discussion in order, say that Deputy Gibbons has raised the point here and it is perfectly valid. I think I am called upon to make a ruling here. I believe we have strayed but it is very useful information and it is also no harm that there is a chance for Deputies like Deputy MacSharry to put the points directly to you, if you do not mind.

—Yes, of course. I would be very happy to look into them.

Whatever about the technicalities of order, we can do something constructive in exchanging ideas.

557. Deputy H. Gibbons.—I adverted before to the question raised by Deputy MacSharry and later Deputy C. Murphy about documentation not conveying the intended message. I understand that the whole income tax system is being reviewed, and I expect that aspect will also be reviewed. The standard document does not seem to get the messages across, for example, in connection with the collection of health contributions. Having paid your tax, you get further assessments and the document does not cover exactly the situation which the taxpayer has to meet. In other words, you get the document and say: “I thought I had paid that”; then you reply to the Revenue Commissioners again, making more work for you.

—It is difficult to answer a question like that without having a specific case in front of one. But it must be realised that many assessments have to be made in the absence of accounts. Companies or traders may not send in their accounts in time. An estimated assessment is made, perhaps it does not give them all the allowances they are entitled to or, perhaps, it is inadequate, and that it has to be amended. The person does not pay the tax when it is due, and subsequent demands will incorporate the interest. If he does not pay it at that stage, he will get a demand later on with further interest added. In most cases where people get a multiplicity of assessments and demands it is due to the fact that they have not sent in their returns at the proper time and that estimated assessments have to be made in the absence of full information. That applies both in relation to income tax and in relation to VAT and PAYE. If an employer does not send in his PAYE return in time the Collector General has to estimate his liability on the basis of the best information available, which is his previous record. If he does not pay the next month when the tax is due, the Collector General will have to do that again. It is only where a person fails to comply with the law that these types of problems normally arise.

558. Yes. In the case where tax is paid, about one month afterwards he gets further demands for tax. I understood that, with the computer system being so fast and up-to-date, immediately you paid back, inside the week, this would be recorded on the computer and the other documents would not be coming out for four weeks afterwards.

—I would certainly be happy to look into any case where that arises. But in most cases that I have seen where people have alleged that they have paid the tax and that they got a second demand, it is generally another instalment which might be for the same amount. Without reference to an actual case, it is very hard to make a reply, but it frequently happens that people think they have paid and what they paid is the same amount for an earlier year or an earlier instalment of tax.

559. Chairman.—Would you say that as the complexities of your machine and as the volume of the work that is falling on your Department increases, there are bound to be cases like these? I know the difficulties, because it is a very automatic procedure and the slightest irregularity or delay causes these difficulties, and we can expect a little more of this from your Department, with the best will in the world from all your staff.

—What you say is absolutely correct. Could I just make reference to two cases that have come before me within the last few days? A case of a man who said: “I made two returns and I have got another return now. What happened the earlier returns?” I looked into the case and found that he had made two returns but he had used somebody else’s forms with a different reference number and they had been filed under that other person’s reference number. Another man only yesterday was complaining that he had already made a return but in this case he had actually signed under a different name on the first return. It is almost the same name, but——

It is extraneous to this Committee, but I have had a great deal of experience with this problem of the computer. What amazes me is the efficiency with which you have got your computerisation working. It is nothing we would not expect from you, but you can pat yourselves on the back for the efficiency with which you did mechanise.

—The human factor comes into everything: taxpayers make mistakes; some of our staff make mistakes. We have a tremendous turnover in staff. We send all our staff to a training course but despite that mistakes happen.

560. On last year’s accounts we were talking about the difficulty of trained staff leaving you?

—That is a real problem, of course.

And often leaving to create further problems.

—That is true too.

561. We have often heard of the poacher turned game keeper, but here it is a case of the game keeper turning poacher. Taking the Comptroller and Auditor General’s figures before us here ín paragraphs 14, 15 to 17—and having in mind also the memorandum which you so kindly furnished us at our request—it appears that if you take the Book of Estimates for the year in question—I am putting the picture in a most casual and approximate way —the total estimate for the year was £585 million. There are elements coming into that other than the elements that are appearing in these tables, and we must make due allowance for that. There is a budget estimate in paragraph 15 of £500 million and the revenue yield matched it to within £40 million. That was satisfactory, giving a little surplus to the Exchequer on the budget estimate. In the next paragraph you have a total, if I do a very rough calculation here, of £35 million of tax outstanding. That is the picture for the year we are dealing with. When you look at the comparative totals for the previous year, in general terms, I think the statement is warranted that you met your budget commitment. Is that £35 million included in the net yield of £540 million or not?

—No.

In other words, that is actual yield?

—Yes.

562. So you exceeded your target in actual collections. Everybody would regard this as a satisfactory situation but it is noticeable that for the previous year the amount outstanding is a little less. In other words, there is a greater amount outstanding in the year ended March, 1973 than the previous year under all these heads. There is not a great change in percentage.

—I should like to point out that of that £35 million outstanding approximately £25 million is tax that is under appeal or under inquiry.

I know. I am not taking it as lost tax at all.

—A good deal of it will be discharged.

You will follow my argument in a moment and I am looking forward to what may be your difficulties. That is why I should like to analyse it in general and get an understanding of these figures first.

—Yes.

563. In both of the years mentioned here in the Report of the Comptroller and Auditor General it seems to me that, roughly speaking, you have been buoyant, you have exceeded your estimate. You collected more than your estimate and the proportion of the outstanding amount is approximately the same. Is that a fair statement?

—Yes, that is fair.

564. This year there will be a budgetary demand of £1,093 million and this will certainly be more before the year ends. We know from your memorandum the background to this and it explains your difficulties. I should like to know do you anticipate that you will not be able in current circumstances to keep up your previous performance which is typically represented in these reports? Again, this question requires to be answered in two parts. The question can be asked in terms of the actual current situation without any regard to past legislation but it then has to be asked in the light of the foreseen results of what I see, I hope wrongly, as an extremely heavy burden about to come on your shoulders. I think only fair that you should have the opportunity of saying this at this stage rather than have it come up in subsequent reports. Are you apprehensive that you will be unable to keep the relationship that you have here to the budget, in the first instance, and also the relationship of the net yield as collected to the amount outstanding? In other words, the State’s cash flow is involved here. Are you apprehensive that you will have very serious problems and, perhaps, inability to measure up to your existing standards? Perhaps that is not a fair question and I would like to leave you absolutely free to make any comments you wish.

—This is a very important matter to which, of course, we are giving our fullest attention. The first question is one which is entirely outside our control and that is the extent to which there may be a shortfall in revenue due to economic conditions. As to whether the estimate will be realised, this depends on economic factors but insofar as the amount of tax is collectable we are faced with greater difficulties than those we had to face in the past because of the lack of liquidity on the part of many businesses. If we do not achieve as high a target as we did in the past it will not be because of any failure on our part. We regard compliance with tax law as our primary function and I have set up a committee of very senior officers to give their constant attention to tax collection. My colleagues on the Board and I are getting before us each month the up-to-date position of any defaulters and we are watching them so that a situation will not develop where the arrears are worse than what we thought they would be. We are keeping our fingers very closely on the pulse of the tax body. Whether the existing collecting system—and I do not mean merely the Revenue system; I mean the system to which I referred to in my memorandum—is adequate to meet the growing demands that will be put upon it is a matter which is receiving not merely our attention but we have also involved the Department of Finance, the Department of the Public Service and the Department of Justice to help with the problems that are facing us. You are quite right in saying this is a matter of the greatest concern.

565. We are strictly confining ourselves to this year but you can foresee your problems and you are entering a period where, both legally and factually, you will be giving large credits for a period in certain regards? Is this not so in the period between April and July, for instance?

—That is true. We are having problems which we did not have to face in the past because of the lack of liquidity in so many concerns. Our function is to collect tax and in relation to PAYE and value-added tax we regard it as a serious offence on the part of a business to divert the money, which they should have paid over to us, to their business resources. We do not regard their business difficulties as justifying that at all.

I think everybody will support you in that attitude. Your performance to date has shown commendable efficiency and the Committee are concerned that, perhaps through no fault of your own, you would run into difficulties. If there is anything that could be done to head this off, I think that is part of our function.

—Thank you very much. We appreciate that.

566. Paragraph 18 of the Report of the Comptroller and Auditor General reads:

“Value-Added Tax

The Value-Added Tax Act, 1972 provided for the introduction, with effect from 1st November, 1972, of a value-added tax at various rates to replace turnover tax and wholesale tax which were abolished from that date. Gross receipts from the new tax amounted to £34,155,736 in the period ended 31st March, 1973, partly offset by repayments amounting to £2,212,162 in the same period leaving a net yield under this head, £31,943,574, as shown in paragraph 14. I have been furnished with details of the administrative and accounting procedures introduced to control the charge, collection and remittance of the tax but I have not yet had an opportunity to test their effectiveness.”

Mr. Jacob.—This paragraph records the yield from value-added tax for the period 1st November, 1972 to 31st March, 1973. The effectiveness of procedures to control the charge, collection and remittance of the tax, as mentioned in the final sentence, has since been examined. This examination has shown control to be satisfactory except in one area which will be reported on by the Comptroller and Auditor General in his report on the 1973-74 accounts. I should say, however, that the Accounting Officer has informed us that the control in question will be fully effective in 1975-76.

Chairman.—Would you like to make any comment on that?

—I think possibly what you have in mind is the linking of the turnover tax figures with the income tax figures and when we had the year of change-over to value-added tax we felt that the cost of trying to align the figures for turnover tax for part of the year and valueadded tax for the other part of the year would not be worthwhile, so we decided not to do it for that year, but we did it for subsequent years. In other words, there would be a lack of homogeneity in the figures, and it was felt that there would not be any point in doing it for the year of change.

It was only in respect of parts of the year?

—Yes. That is the point. We were following it up strictly when we had the situation applying for a whole year, and we are continuing where we have the whole year for valueadded tax, but for the broken year we felt that the two bits could not be tied together.

567. We now take the Vote on page 15. On Subhead I—Office Machinery and other Office Supplies—there is a fairly big amount there. Does that £½ million in that year cover the computer or anything like that?

—Yes. The rental for the computer. The total there was £477,000. Other items were the supplying of Kardex cabinets and dictaphone machines, £11,000; and computerisation of Customs and Excise accounting procedures, £13,000. In the Accountant General’s office the rental of calculators, punches and verifiers was £14,500, and other equipment, £16,000. It was the installation of the new computer that is largely covered there.

568. If there are no more questions, I should just like to say that every Deputy in the House appreciates the problems that are facing you and you are such a vital part of the body politic that it must be a major concern for the Committee to look after you as well as we can.

—Thank you very much, indeed, Chairman, for your courtesy and kindness.

Thank you again for that very straightforward document which is extremely helpful.

The witness withdrew.

VOTE 40—INDUSTRY AND COMMERCE.

Mr. P. Ó Slatarra called and examined.

569. Chairman.—Paragraph 76 of the Report of the Comptroller and Auditor General reads:

“Shannon Free Airport Development Company, Limited

In the course of audit it was noted that the above company held large balances of cash on current account throughout the year and I have asked the Accounting Officer for information regarding the control exercised over the issue of moneys to the company.”

Mr. Jacob.—We sought information from the Accounting Officer regarding the control exercised over the issue of moneys to the company as we considered that there was a possibility of moneys being issued from the vote in advance of requirements and that consequently the holding by the company of balances on current account would be uneconomic as far as the Exchequer was concerned. The following reply has been received from the Accounting Officer:

At close of business on 31st March, 1973 invoices and architect’s certificates to the amount of £388,847, relating to 1972-73 expenditure, had not been presented to the company and this resulted in the cash balance being higher than would have ordinarily arisen had accounts been received in time for payment; most of those outstanding accounts were paid early in April, 1973.

A similar situation would arise to affect the balance at other month-ends during the year. In addition, other considerations applied to aggravate the position in specific instances; for example, at end December, 1972, a relatively high cash balance arose because payments, which contractors had customarily claimed on a pre-Christmas basis, were not claimed before the end of December, 1972—in February, 1973 the certificate of capital expenditure for that month did not reach the company until March.

The method of advancing funds to the company has been altered recently; a requisition will be made by the company about the 20th of each month so that funds can be provided early in the succeeding month to enable accounts maturing for payment to be met when due, thus reducing the likelihood of excessive month-end balances accruing.

Requisitions for funds will continue to be subject to close scrutiny by the Department; in addition the company is endeavouring to improve estimation, so far as is practicable to do so, by the elimination, to the utmost degree possible, of variations resulting from delays in work measurement and presentation of architect’s certificates. There are, of course, limits to the extent to which precise estimating is possible.

A further consideration is that the company make the case that they operate on a commercial accounting basis and should be permitted to apply accepted commercial accounting principles in which the cash balance situation would be looked at in the light of the liquidity and net current assets ratios; these ratios would have been satisfactory, they maintain, at 31st March, 1973.

570. Chairman.—Have you anything further to add to your reply. This is a matter we will come to again in our report.

—I do not think so. We gave a fairly complete reply. The only thing that I would say now is that since we made a change in the procedure in October, 1973 we have been able to keep the end-of-the-month balances down. Earlier on you may recall the question was raised at the Committee and we thought we had solved this problem but, in fact, we had not. We can now solve it because we are synchronising the timing of the issue of payments to the company with the times that they would be expected to be paying their bills so that the money arrives at about the time they would be spending it. The Comptroller and Auditor General will agree that we have achieved this result from the figures we have from October, 1973 onwards.

571. Paragraph 77 of the Report of the Comptroller and Auditor General reads:

“Subhead J.3.—Housing Subsidies

Reference was made in paragraph 86 of the previous report to the introduction of a differential rents system as a result of which the final cost of subsidising the letting of houses by Shannon Free Airport Development Company, Limited at reduced rents had not been determined by 31st March, 1972. The charge to the subhead, £140,965, comprises £965 in respect of the balance of subsidy for 1971-72 and £140,000 on account for 1972-73. Any necessary adjustment of the subsidy for the latter year will fall to be effected when the final cost has been determined.”

Mr. Jacob.—This paragraph is for information being supplementary to paragraph 86 in the 1971-72 Report which drew attention to the introduction on 1st April, 1971 of a differential rents system by the company in relation to the letting of its houses. We are satisfied with the manner in which the Department makes subsidy payments.

Chairman.—I do not think there is any comment on that.

Mr. Jacob.—No. As a matter of fact, we will not have this paragraph again.

Chairman.—You are satisfied now.

Mr. Jacob.—We are.

572. Chairman.—Paragraph 78 of the Report of the Comptroller and Auditor General reads:

“Subhead M.—Irish National Productivity Committee (Grant-in-Aid)

Subhead MM.—Irish Productivity Centre (Grant-in-Aid)

In the year under review a grant-in-aid of £168,000 was provided for the Irish National Productivity Committee, a company limited by guarantee, without a share capital, to enable it to meet the cost of administration, travelling, subsistence and other expenses. The objects of the company, as stated in its Memorandum, include the promotion, stimulation and raising of the standards of productivity in Ireland. The company, by Special Resolution passed on 25th May, 1972, adopted new Articles of Association and changed its name to the Irish Productivity Centre, its objects remaining unchanged. The Department of Finance sanctioned the opening of a new subhead to provide finance for the Centre and a grant-in-aid of £160,010 was made available by supplementary estimates (subhead MM). There was a consequential saving of £145,000 on subhead M. As shown in the account the total amount of grants-in-aid paid to the company in the year was £183,000.”

Mr. Jacob.—This is an informative paragraph outlining the financial technicalities which arose on the vote when the Irish National Productivity Committee changed its name during 1972-73 to the Irish Productivity Centre.

Chairman.—To whom grants-in-aid are made and the circumstances are easily determined. They are not administrative matters really. Once a grant-in-aid is passed that is that.

—That is true.

573. Paragraph 79 of the Report of the Comptroller and Auditor General reads:

“Subhead S.—Wool Textile Industry— Provision for Temporary Assistance to aid Restructuring

Following a recommendation by a firm of consultants engaged by the Department to examine the wool textile industry, the Government agreed, in October, 1972, to provide financial assistance in order that firms assessed as being not viable could be permitted to remain in business for a limited period to facilitate the orderly restructuring of the industry and to enable the assets of those firms to be deployed to the best advantage. The Government directed that such assistance should be limited to the amount needed in any particular case to maintain the activity at not more than its existing level and to discharge only those obligations which would arise during the period of support. In the year under review funds were made available out of the subhead to three firms in receivership. As I am not entirely satisfied that the limits imposed by the Government were observed I have communicated with the Accounting Officer on the matter.”

Mr. Jacob.—As stated in the paragraph three firms obtained assistance from the vote in 1972-73. Final receivers accounts have been received in respect of two of the firms and the third account is awaited. We have considered the accounts and also the information furnished by the Accounting Officer in reply to our inquiry. Subject to the third account being satisfactory, we are now satisfied that the terms of the Government approval to provide temporary assistance were observed.

574. Chairman.—In matters of this nature do you agree that there is a second discretion here and the Department’s only protection, so to speak, is Government approval? They have to have the Minister’s sanction. It is not an administrative matter for yourselves.

—I agree. We were working within the terms of the Government’s approval both in relation to the amount of money provided initially and when that had to be exceeded we were working within the terms of the Finance sanction.

575. This terminates what the Comptroller and Auditor General had to say. Coming to a wider area your Department make provision for such things as grants and assistance. I know that grants are delegated to one body and price control is largely delegated to another body. On the question of price control, do you think you or the Prices Commission ought to fix prices now?

—Fixing prices now might not be the accurate term. There are only a limited number of commodities where the actual retail price is fixed, that is in the sense of the maximum price being prescribed by the Minister. In the cases of other price increases, a large number of them pertaining to manufacturers, the Prices Commission examine the application for a price increase. They take into account the varuios costs and so on that are involved and they make a recommendation to the Minister that the application be allowed in full or that a reduced application be admitted or that it be rejected.

576. The point I am making here is where the responsibility lies. It is your Department that directs the exercise of price controls—is that correct?

—The ultimate responsibility is with the Minister for Industry and Commerce.

577. And it is a matter for administration within your Department. You say the ultimate responsibility is with the Minister. The question I am going to ask is: Is care being taken to see that there is a proper objective equity over the area involved? In other words, are you satisfied that the system may not be developing where the Department give preferential permissions to some people and refuse them to other people in the same line of business?

—I have no reason whatever to think that anything of that kind occurs.

578. Deputy H. Gibbons.—On subheae D— Geological Survey, Equipment, Stords and Maintenance—is the situation changing now? In fact instead of having money on hands you have not enough money to meet your commitments?

—The position about the Geological Survey is that we are getting a great deal of extra work as a result of, say, mineral development here and the possibilities in relation to off-shore exploration. There is a need to strengthen the existing staff in the Geological Survey and that would mean that we would need further resources at a later stage. On the next subhead, which is the one for minerals development— subhead E—there is only one aspect of the particular situation—providing for compensation to the former owners of minerals which were compulsorily acquired.

579. It is indicated that you had a staff of 43 in 1972-73. Has this number increased now?

—I have not got an actual figure with me for the later years, but I know that the staffing of the Geological Survey would have increased from the figure which you have mentioned.

Could we have a note on that because there was a figure of ten produced in public.

—An extra ten, a total of ten?

Yes.

—That is not correct, but certainly I could let the Committee have a note on it.*

580. Chairman.—On subhead I.1.—Industrial Development Authority—Administration and General Expenses (Grant-in-Aid)—I presume that, as in other Departments, you keep a fatherly eye on the expenditure of the moneys granted in aid here and under Subhead I.2?

—Yes, we regulate the issues and, as I explained on a previous occasion, the proposed budget for these organisations for subsequent years comes into us and we examine it in conjunction with the Department’s estimates.

But also their allocation?

—Yes.

581. Deputy H. Gibbons.—Is the Committee on Industrial Progress still sitting?

—No, that has completed its work now. This is, of course, related to the year 1972-73. The Committee has submitted not only the detailed reports which have been published in relation to individual industries but has also submitted a general report giving a conspectus of its view of industry at large.

582. Is the Committee on Fiscal Policy in relation to Mining still active?

—That was purely an inter-departmental committee and, again, it no longer exists. In relation to further developments, particularly in regard to off-shore developments, which is a highly technical thing, we have been going on the basis of consultancy rather than an inter-departmental committee.

Where do the consultants come from?

—They are international consultants.

The witness withdrew.

The Committee adjourned.

*See Appendix 12.

*Includes £262,305 Duty deferred under E.E.C. Regulations.

*See Appendix 13.