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MIONTUAIRISC NA FINNEACHTA(Minutes of Evidence)Déardaoin, 9 Márta, 1978.Thursday, 9th March, 1978.The Committee met at 11 a.m.
DEPUTY O’TOOLE in the chair. Mr. S. Mac Gearailt (An tArd-Reachtaire Cuntas agus Ciste) called and examined.VOTE 2—HOUSES OF THE OIREACHTAS.Mr. M. J. Healy called and examined.380. Deputy V. de Valera.—On subhead A there is very close budgeting but I should like to refer back to the Estimates. The Estimates show that for the nine months of 1974 the figure was £400,000 and for 1975 was £671,000 which does not show a very great increase or reflect any expansion of staff. In the meantime there has been a very considrable work-load. There have been additional work-loads on the staff in respect of committees since we entered the EEC. It is also true that the number of questions, both written and oral, being asked by Deputies has assumed large proportions in recent years. It would not be too much to say that they are many multiples of what they were formerly, is not that so? —They have fluctuated and they are very high at the moment. On the average? —I should not like to say without checking. There is no need to go back; I can talk from my own knowledge on that. Chairman.—As regards staff, that is covered by subhead E. 381. Deputy V. de Valera.—I beg your pardon, yes, I was thinking of the Dáil. On the Dáil, with these backgrounds there, is the status structure of your staff comparable to that of any ordinary Department? What is the status, for instance, of the Clerk Assistants of the Dáil and Seanad—if I may anticipate subhead E? —If I may refer to history for a moment, the staff structure at Leinster House was decided upon away back in 1923. A committee of the two chairmen and the Minister for Finance were appointed by the Houses to make recommendations. They recommended a staff structure corresponding to the structure in the Department of Finance as distinct from a structure corresponding to the general civil service. The Clerk of the Dáil was put at the level of Assistant Secretary in the Department of Finance. The Clerk of the Seanad and the Assistant Clerk of the Dáil were put at the level of Principal Officer in the Department of Finance and so on down the line. That structure has remained with us ever since. A proposal was made in 1971 that we change to a general civil service structure with the Clerk of the Dáil corresponding to Secretary in an outside Department and the Assistant Clerk of the Dáil and the Clerk of the Seanad corresponding to Assistant Secretaries. The Department of Finance did not accept that and they offered an alternative of another officer at a high level, at the same level as Assistant Clerk of the Dáil and Clerk of the Seanad and that was accepted. He was appointed and was entitled Clerk Administrator. We now have a staff structure corresponding to appointments in the Department of Finance with the Clerk corresponding to an Assistant Secretary in the Department of Finance and three people on the next level, the Clerk of the Seanad, the Assistant Clerk of the Dáil and the Clerk Administrator at Principal Officer Finance level, and so on down. Below the second level we now have some posts corresponding to levels of the outside service, the general civil service; for example, the recently appointed Clerks to the Committees on Secondary Legislation of the European Communities and the semi-State Bodies are at Principal Officer general civil service level. 382. On the matter of the semi-State Bodies Committee, has the appointment been made at that level? —Yes. A question arose as to how that came about. However, I do not want to go into it. —I would like to explain further. My Clerk-Assistant and the Clerk-Administrator and the Clerk of the Seanad are on the level of Principal Officer in the Department of Finance. That is a higher rank than Principal Officer in the general civil service. In other words the supreme Parliament is being written down to a lower level than Finance? Deputy Woods.—In terms of status. —At Secretary level it is immaterial because the Assistant Secretary in the Department of Finance is the same as the Secretary in the other Departments, so that I can be taken to have the same salary as Secretary of a Department or Assistant Secretary in the Department of Finance. In the case of the other officers here it is different. The men immediately below my level—Clerk of the Seanad, Clerk-Assistant of the Dáil and Clerk-Administrator—are all ranked as equivalent to Principal Officer in the Department of Finance. The Clerk of the Dáil may have the equivalent salary without having the status—— —I do not think it makes much difference. 383. Deputy V. de Valera.—I may be making a rather irregular suggestion, but I should like to ask that we have a memorandum from the Accounting Officer setting out the hierarchy here, with remuneration, and if it is in order, I should like to request the equivalent memorandum from the Department of Finance. That Department has been split to form the Department of the Public Service. When we get these memoranda we can decide whether they should go on record. It is customary to leave certain discretion in such matters to the Chairman. —May I mention that the Department of Finance function in relation to staff has now gone to the Department of the Public Service, so it should be the latter Department who should supply the memorandum? We are entitled to ask for such information from the Accounting Officer whose Department is touched by it. —I understood the Deputy asked for two memoranda.* We could get one from the Department of the Public Service later. 384. Deputy Woods.—I should like to support this in principle. If I may refer to subhead E, what is the difference between Dáil Éireann, Seanad Éireann and Houses of the Oireachtas? —In the case of each House, there are two officers solely attached to that House —the Clerk and the Clerk-Assistant. They are officers of that House doing solely Dáil or Seanad work. After them, all the staffs are joint—they work for either House as required. The Ceann Comhairle is the ultimate superior of the joint staffs and he can assign them as required to Seanad duties. While on Seanad duties the Cathaoirleach is the authority. 385. Chairman.—We are concerned with the status of the Houses of the Oireachtas. There are two matters, status and salary. You have explained the salary aspect. The explanation in respect of status would seem to be that you are not equated to anybody else—you have your own status as Clerk of the Dáil. You are tied up from the point of view of salary but you have your own status as Clerk. —Yes. It is provided for in Standing Orders and in various statutes. Deputy Woods.—Being a new Member of the Oireachtas I should like to pay a tribute to the general staff of the Houses of the Oireachtas. In the House I find them extremely courteous and helpful. They have an intense sense of respect for the House which is quite edifying. When one comes into the House there is maintained a decorum and service in the House which in terms of democracy is a very fine thing to see in practice. I would be interested in seeing what their levels of remuneration are individually. In relation to the status of the House and the functions which are performed in relation to the House I would like to see this on a reasonable and right level financially as well as status-wise. Too many people have status without that being recognised in practice. I make that point because I have felt very deeply on it since I came to the House. That is all I want to say. Chairman.—We all can go along with that expression of gratitude to the staff of both Houses. They are second to none. We appreciate that very much and we hope it will be appreciated remuneration-wise. It is a most practical way of showing appreciation. 386. Deputy V. Brady.—Allowing for the fact that 1974 covers a period of only nine months and also that numbers increased by 10 from 1974 to 1975, staff salaries show on my rough calculation an increase of 60 per cent. Would the witness like to comment on that? —On what subhead? Subhead E. It shows £555,000 in 1975 as against £293,000 in the nine-month period covered in 1974. The former figure was subsequently re-adjusted to £500,600 and expenditure was £495,245. —We had cost of living increases that year and we also had some increases in staff. We had an increase of ten in staff. Deputy V. de Valera.—There is overhead expenditure also. Deputy V. Brady.—There is not an explanation. —I could not give an explanation other than that we had increases in remuneration and also some increases in staff. If the Chairman would like I will have a note sent explaining the increases in detail.* That is fine. Thank you. 387. Deputy V. de Valera.—Arising out of subhead E, that is very relevant here to you, Mr. Chairman. We should draw attention to the fact that the Clerk to this Committee has a very heavy load, that he is a part-time clerk to this Committee and that there is a very heavy additional load in the office in which he is. Would you agree with that statement? —My position is that as Accounting Officer I am the final authority subject to this Committee, but as Clerk of the Dáil, under which I would deal with staff I am not the final authority. The Ceann Comhairle is the statutory authority and he has to consult the Cathaoirleach of the Seanad on all staff matters, promotions, assignments and all the rest. It would be unwise of me to express a view. I do not wish you to express a view. I merely want to confirm a fact. Is it not a fact that the Clerk to this Committee in addition to the work devolving on him as Clerk to this Committee has a very heavy responsibility in the General Office in particular in regard to Dáil Questions? —That is true. And that the volume is not insignificant? —That is true. And that in fact every Question submitted by a Deputy must be examined as a preliminary to whether it is in order before it goes to the Department, and that that same clerk is then responsible for having the answers coming in? I have never asked and I do not know what the relationship is to having the Order Paper prepared but this must enter into it in some way. I completely agree that it would be improper for us to ask for an opinion. We do not ask for an opinion, we merely seek corroboration of a fact that the General Office in this regard has a very heavy work-load and that the bulk of that work-load devolves on the officer in charge of that section who is also Clerk of this Committee, and it is so with like Committees also. —The present allocation of work has obtained since 1971. I think prior to that the General Office also dealt with Bills. The Bills were taken away and only this Committee and the Questions left. Is this in the General Office? —Yes. In the staffing of the General Office has the Clerk to this Committee a general work-load in regard to this matter as well as the work of the Committee? —Yes. It is a load to carry, and we will deal with that. 388. Chairman.—I would agree and while we appreciate that much, the Accounting Officer should know that as things stand at present we have only the part-time services of our Clerk who is also responsible, as the Deputy has stated, for Parliamentary Questions. With Questions running at the present high level the availability of the Clerk’s services to this Committee is, of necessity, seriously curtailed. We as a Committee are charged with the duty of overseeing public expenditure and financial administration. We look on this position in a very serious light. It is a very desirable precondition to scrutinising the financial administration of the public services that we should have all our own administration working efficiently to this end. We must have the full-time services of our Clerk, having regard to the nature and importance of our work. His status should not be inferior to that of the Clerk to the EEC Committee or the semi-State Bodies’ Committee. Members who devote their time and energy to this Committee are entitled to a proper and adequate back-up service. This point was made by my predecessor and, perhaps, by my predecessors also. I put this to you as an expression of the Committee’s feelings and of our serious concern regarding the work-load of the General Office which is being placed in an impossible position in relation to the servicing of this Committee. What I have said is not to be taken as a criticism of you as Accounting Officer. You will appreciate our problem. We are now calling for action. —I will convey your views to the Ceann Comhairle and the matter will be looked into. 389. Deputy V. Brady.—On subhead F.2 —Incidental Expenses and Travelling of Officers and Staff of the Houses of the Oireachtas—I note there is a saving of more than £6,000, due to the expenditure on equipment being less than anticipated. That situation is fine but may I ask what is the basis on which office equipment is purchased? Is it leased, how often is it changed and so on? Office equipment is a very heavy expense in all Departments and so far we have not asked a question in this regard. Perhaps the Accounting Officer would like to comment on the situation in respect of his Office? —I regret that I have not the details of the office equipment in question but it would be in the nature of machines for typing and similar equipment as much of the ordinary office furniture is supplied by the Board of Works, and consequently, is a charge on that Office. I shall send the Committee a note of the details.* Chairman.—Although we are told in the note that the expenditure on office equipment was less than anticipated I presume the Committee would not accept that statement of fact as an explanation for the variation in figures? Deputy Woods.—This question has arisen in a number of accounts. The most obvious feature in the data is that the expenditure was less than anticipated but it would be more satisfactory if, in such cases, there were a note giving the reasons for this. Merely to say that the expenditure was less than anticipated is meaningless. The reason may be that the expenditure carried over into the following year but it would be better if some explanation were offered. —I will have a note prepared on that, too.* Chairman.—I thank the Accounting Officer for his co-operation and trust that he will convey our remarks to the appropriate authorities regarding the staffing of this Committee? —I will bring those matters to the attention of the Ceann Comhairle. The witness withdrew. VOTE 19—VALUATION AND ORDNANCE SURVEY.Mr. D. F. Ryan called and examined.390. Deputy Woods.—On Subhead B— Travelling and Incidental Expenses—was there some reason for the amount being greater than anticipated? The footnote merely states that the increase was greater than anticipated. Was this due to a change in rates? —Yes. We got guidelines from the Department of Finance for an increase of 12½ per cent. These matters are negotiated by the staff with the DPS and the actual increase in subsistence rates was 28 per cent. A simple note to that effect would be helpful, a note to the effect that the increase in travel and subsistence costs was greater than anticipated because it exceeded the guideline of 12½ per cent. Without such a note the figures do not tell anything. The difference could have been for a different reason, for instance, that there was more travel than in previous years. —We can do that for you. Chairman.—If there are no further questions that completes Vote 19 and we go on to Vote 20. VOTE 20—RATES ON GOVERNMENT PROPERTY.Mr. D. F. Ryan further examined.391. Chairman.—As there is no comment from the Comptroller and Auditor General we can go through the subheads. If there are no questions that completes Vote 20. Perhaps the Accounting Officer might wish to make some comment before we move on? —I want to thank you very much for giving me a bye. The witness withdrew. VOTE 9—PUBLIC WORKS AND BUILDINGS.Mr. S. S. Mac Cárthaigh called and examined.392. Chairman.—Paragraph 17 of the Report of the Comptroller and Auditor General reads: “Subhead E.—New Works, Alterations and Additions The charge to the subhead comprises expenditure on general architectural and engineering works carried out by the Office of Public Works. As from 1 January 1975 provision for grants towards the building, improvement, equipment and furnishing of national schools, formerly included in this subhead, is made in the Vote for Primary Education. The responsibility of the Commissioners in relation to the planning and design of the schools, the placing and supervision of contracts, the bringing to account of local contributions and the making of payments remains unchanged, the funds being made available by way of imprests from the Vote for Primary Education.” Mr. Mac Gearailt.—This paragraph is for information. It refers to a change in the accounting arrangements for expenditure on the provision of national schools. There has been no change in regard to responsibility for the work involved in the planning and erection of the schools. 393. Chairman.—This change was made in the interests of efficiency, I presume? —Yes. There is a general tendency to do that now. The Department primarily responsible for the service carries the money on its Vote. We are only contractors for the Department. At one time, regularly in the debate on our Vote in the Dáil questions were raised about the administration of these services because the money was in our Vote but being under the Department Vote now, the Department concerned deals with questions of policy in relation to it. You are agents for it? —Yes, contractors really and advisers. 394. Paragraph 18 of the Report of the Comptroller and Auditor General reads: “Suspense Account Construction works at fishery harbour centres are carried out by the Office of Public Works for the Department of Agriculture and Fisheries on a repayment basis. A test examination of stores records carried out by my officers at a harbour centre in October 1975 showed that in a number of instances the quantities of diesel fuel entered on stores requistions had been subsequently altered to higher amounts which were then recorded as the issues in the stores ledger. The alterations in a limited number of requisitions examined resulted in the figure for fuel issues over a period of eight weeks being increased by approximately 700 gallons. It was also noted that no equipment was available for dipping the fuel tanks at this centre. I accordingly sought the observations of the Accounting Officer. He informed me that it had been established that the alterations were made by the storekeeper who, having discovered sometime in 1975 that the actual balance of diesel fuel was approximately 700 gallons less than the book balance, concluded that the discrepancy must have been caused by under-measurement of past issues due to inadequate measurement equipment and, on his own initiative, misguidedly sought to eliminate it by altering some earlier records. The Accounting Officer also stated that the real cause of the discrepancy had since been traced to the fact that issues of approximately 700 gallons of diesel fuel for use on a bulldozer engaged on maintenance work on a drainage scheme from April to June 1975 had not been covered by requisitions nor entered in the stores ledger. This happened during a period of intense pressure on the storekeeper and the works organisation generally. The Accounting Officer further stated that an exhaustive investigation had been made but that there was no evidence to suggest—and this had been confirmed by the Garda Síochána—that any of the diesel fuel consigned to the harbour centre had been consumed otherwise than in execution of approved works. He added that the situation at the centre now is that proper storekeeping procedures are in operation and close supervision is being exercised. The question of whether any disciplinary action is warranted is being considered.” Mr. Mac Gearailt.—This paragraph refers to the discovery by my officers during a local audit of what appeared to be an irregularity in the vouching of issues of diesel fuel at a local centre of the Office of Public Works. The nature of the apparent irregularity is explained in the paragraph which also includes the Accounting Officer’s observations on the matter. The accounting Officer has stated that there was no evidence to suggest that diesel fuel consigned to this centre was consumed otherwise than in the execution of approved works. 395. Chairman.—The same problem is referred to in paragraph 19 of the Report of the Comptroller and Auditor General which reads: “In the course of the examination of stores records referred to in the previous paragraph it was also noted that the quantities of diesel fuel requisitioned for a machine over the same period of eight weeks appeared to be considerably in excess of its requirements according to the relevant plant maintenance record forms showing the estimated fuel consumption and I sought the observations of the Accounting Officer on the apparent discrepancy. He informed me that the quantity of diesel fuel shown as having been issued for the machine in the period represented normal consumption for the number of hours which it had worked. These issues should have been entered as fuel consumption on the relevant plant maintenance record forms, but, in fact, the entries made on those forms were estimates of consumption computed on an incorrect basis. This erroneous procedure, which arose from a misunderstanding on the part of a storekeeper, has ceased and the correct procedure is now being observed. The Accounting Officer also stated that he is satisfied that all of the fuel issued was properly used and that there was no question of misappropriation.” and in paragraph 20 which reads: “In the course of the same examination of stores records it was noted that a landrover, recorded as “off hire” from July 1974, had not been returned to Central Stores but was still located at this harbour centre. An examination of stores issues showed that diesel fuel continued to be supplied regularly for this landrover. The vehicle appeared to be in good working order but, as its log book had been lost, there was no record of the number of hours it had worked. It was also noted that a truck located at this harbour centre did not appear to be fully employed according to the local plant maintenance records. As a contract for the supply of three new landrovers was placed in November 1974, I communicated with the Accounting Officer regarding the procedures adopted to ensure that machines in working order which are “off hire” are re-deployed as quickly as possible to other schemes or returned to Central Stores. He informed me that, because of the scale and nature of operations, their remoteness and the difficulties in hiring vehicles locally, it was expedient and economic to retain both of these vehicles on the site, even though neither was in full-time use. The landrover taken “off hire” in July 1974 was under repair, as convenient, up to September 1974 and was in use again thereafter but due to an oversight it was not recorded as “on hire”. No diesel fuel was issued to this vehicle while it was under repair. Its log book, which appears to have been destroyed accidentally in September 1974, has been replaced and log books exist and are in use on all vehicles. The Accounting Officer added that the purchase of the three further landrovers was decided on only after a careful review of existing resources and anticipated requirements and that an improved proceedure for monitoring items of plant “off hire” on sites, which is now in operation at the Central Engineering Workshop, should ensure the timely redeployment of such plant or its return to Central Stores.” Mr. Mac Gearailt.—Paragraph 19 deals with another aspect of the control exercised over the issues of diesel fuel at the same local centre of the Office of Public Works. In this case the quantity of fuel oil supplied on requisition to a particular machine over a period considerably exceeded the quantity shown in the plant maintenance records as the estimated fuel consumption of that machine during the period. The paragraph includes the Accounting Officer’s explanation that the discrepancy was due to the operation of incorrect procedures which have since been corrected. The Accounting Officer is also satisfied that there was no irregular use of diesel fuel in this case. Paragraph 20 also arises out of the visit by my officers to the local centre of the Office of Public Works referred to in the previous paragraphs. It draws attention to the issue of diesel oil in respect of a landrover during a period when the machine appeared to be “off-hire”. The paragraph also refers to the general question of the deployment of machinery to ensure that the maximum possible use is being made of the available fleet before the purchase of additional vehicles is undertaken. As stated in the paragraph, the Accounting Officer has assured me that all issues of diesel fuel to the machine referred to were made correctly and that an improved procedure which has been introduced should ensure the timely deployment of “off-hire” plant or its return to Central Stores. Chairman.—Your statement covers all three paragraphs? Mr. Mac Gearailt.—Yes. 396. Chairman.—Was this an isolated incident at this harbour centre? I would like to know from the Accounting Officer what steps are being taken to ensure proper accountability of stores and supplies following this incident? —There was only one storekeeper there and, unfortunately, through an omission he was not supplied with the normal instructions to storekeepers. There was no question of dishonesty—but when he came up against a discrepancy he was inclined to falsify the records. That was his answer to solving a problem. Instead of investigating the discrepancy as he should do he began to change the stores’ records. In one instance he issued diesel oil but there was no proper measure for issuing oil, only a dipstick. I know a fair bit about stores because I actually worked in a stores organisation. He issued a certain amount and guessed how much and recorded it. Later when he found a discrepancy he falsified the accounts instead of explaining the discrepancy as he should have done. In all cases it was probably inadequate training and secondly a wrong approach to the records but there was no question of dishonesty. 397. Deputy C. Murphy.—The fact that there was no equipment available for dipping fuel tanks at the centre or for measuring does leave the Office open to a great deal of possible— —There is proper measuring equipment there now. What sort of equipment is it? Is it dipping or metering? —The amount issued can be measured. I am not sure of the actual method but there is proper equipment provided. I appreciate that on small units or containers it could be difficult to have continuous measurement but on any large type one would expect there would be a continuing record which would be kept, duplicated and kept centrally, of the quantities delivered to the centre and quantities in stock. Do you know currently what the system is? —Apparently it was the dipstick which was missing and it is back in position now. He was just guessing what was issued in its absence. I wonder was the dipstick inadequate. I am not in that sense a technical person but I think you will find it is possible to have a metering of the amount delivered into the tank. —In our main stores, for instance, in our workshops at Inchicore we have a meter but this was a temporary job, and on a temporary basis you would not have a meter there. My point was to ensure that the amount delivered was actually what it was expected to be. —Yes. 398. Chairman.—In a case like this it is surprising that the discrepancies were not found on the location by some of the supervisory staff instead of having been found up here by the Comptroller and Auditor General’s Office. Was there a lack of supervision somewhere? —We are very short of engineers—there are several vacancies—and there were two jobs going on simultaneously, one by contract and one by direct labour. It was at a time when the engineer was under severe pressure. Nevertheless, we reprimanded him and shifted him from the job. 399. Could you give us a note on the system for dealing with the measurement of, and accounting for oil in relation to schemes in general? If somebody is subjected to a lot of pressure, as was the case in this instance, a fundamental question arises as to the efficiency of the system employed. The concern should be that it will not recur within the Office in general. —We can give you that.* 400. In reference to paragraph 20, it is important that a reliable record of the accounting procedure be kept and that the monitoring system should be reliable. Are you now satisfied that things are going as they should be? —Yes, there is a big improvement. The monitoring system is automatic now. 401. Deputy V. Brady.—Am I to understand that while the landrover was not on official use, diesel fuel was supplied and that this was not noted for some time? —It was not recorded that it was back on hire. There was no change made in the “off-hire” record. It was in use intermittently over a period. 402. Chairman.—In relation to subhead E—New Works, Alterations and Additions —we have been supplied with the usual detailed note.* 403. Under the heading Extra Remuneration, Note 1, there is an item of £18,340 in respect of staff lent. —It was in respect of private staff lent to the then Parliamentary Secretary to the Minister for Finance. This accounts for all his private staff. 404. Deputy V. Brady.—Note 5 on page 28 of the Appropriation Accounts refers to losses by accidental fire not covered by insurance. It concerns me that there was no insurance cover. —It has always been State policy to carry its own insurance. Taken all round, I should think the State gains. The witness withdrew. VOTE 8—OFFICE OF THE REVENUE COMMISSIONERS.Mr. J. F. Richardson called and examined.405. Chairman.—I wish to welcome Mr. Richardson of the Office of the Revenue Commissioners. —Thank you. Paragraphs 10 to 14 of the Report of the Comptroller and Auditor General read: “Revenue Account A test examination of the Revenue Account has been carried out with generally satisfactory results. The net yield of Revenue for the year 1975 and for the nine-month period ended 31 December 1974 under its main heads is shown in the following statement:—
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 period are Income tax, £44,980,156; Sur-tax, £7,087,503; Corporation Profits tax, £10,469,268. Extra-Statutory Repayments of Customs and other Duties Extra-statutory repayments of Customs duties, £10,967, Excise duties, £31,418, Value-Added tax, £463, and Stamp duties, £1,736, 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 31 December 1975. The total amount of the items included in the schedules, £332,644, 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. Mac Gearailt.—These are the usual paragraphs concerning the collection of revenue and the various remissions and repayments. They are for information and I have no further comment on them. 406. Chairman.—In what circumstances do you make extra-statutory repayments? —There are different categories; the biggest is made up of repayments to diplomats who are by international usage not subject to the taxes of the countries in which they serve. When they make purchases with a duty or excise content they are entitled to apply for refunds, and these form the bulk of extra-statutory repayments. This is reciprocal and our diplomats enjoy the same privileges, so to speak, in the countries in which they serve. There are other repayments. Out of a £44,000 total, say, £33,000 would be attributable to diplomatic privilege and the remainder would be under various minor headings of rather small amounts not covered strictly by law, and where considerations of equity or, one might even say, common-sense demand that there should be repayments. Have you any further comments on paragraphs 10 to 14? —No, if the Comptroller and Auditor General is satisfied with them I would not wish to add anything very significant for the purposes of the year 1975 which is the year under review. The members of the Committee might be interested to know that in general the trends of collection continue to be somewhat the same as those revealed in the paragraphs under examination at the moment. We are concerned that the amount of tax outstanding is so large, and we have been taking steps to bring the position under control. These steps will emerge in the accounts for later years, and the Committee might like us to defer giving the full details until we come to the years in which these steps were taken. 407. Deputy Woods.—Regarding paragraph 14 you say these amounts of income tax and surtax are irrecoverable—173 cases and four cases respectively. In what cases broadly would these occur? Would this be someone going into liquidation? —Liquidation for a company, bankruptcy for an individual. There would also be cases of a person who has gone outside the jurisdiction, sometimes suddenly, and it is an international thing again that no country enforces the tax laws of another country, so we cannot do anything unless and until the person resurfaces in our own jurisdiction. 408. Chairman.—Paragraph 15 of the Report of the Comptroller and Auditor General reads: “Wealth Tax The Wealth Tax Act, 1975 provides for the introduction, with effect from 5 April 1975 of a tax at the rate of 1 per cent. on the net market value, on the valuation date, of the taxable wealth of assessable persons, subject to certain deductions and exclusions. During the year under review I did not have an opportunity of examining fully the procedures for assessment, collection and bringing to account of the tax. Total yield of tax in the year was £3,672,411 of which £3,658,000 was paid into the Exchequer.” Mr. Mac Gearailt.—This paragraph, which is for information, refers to a new tax which was introduced in the year under review. As indicated in the paragraph, my examination of the assessment, collection and accounting procedures in relation to this tax did not commence until the following year. This is a normal occurrence since the procedures have to be in operation for some little time before we can test their effectiveness. There will be some problems arising when we come to the 1976 report. —That is so, and of course the position is somewhat altered, if again one projects one’s mind forward, by the fact that the wealth tax has now disappeared. It has been our experience—and perhaps I am anticipating something unnecessarily—that it is much more difficult to collect a tax which has been abolished than to collect one which is ongoing. Chairman.—You have our sympathy, Mr. Richardson. 409. Paragraph 16 of the Report of the Comptroller and Auditor General reads: “Capital Gains Tax The Capital Gains Tax Act, 1975 provides for the introduction, with effect from the 1974-75 assessment year, of a tax at the rate of 26 per cent. on charegable gains accruing to a person on the disposal of assets. During the year under review I did not have an opportunity of examining the procedures for the assessment, collection and bringing to account of this tax. The yield from the tax in 1975 amounted to £40,166 of which £40,000 was paid into the Exchequer.” Mr. Mac Gearailt.—This paragraph is also for information. I have no comment to make. 410. Chairman.—Could I ask the proportion of collected revenue that goes on administration in general? —I can be rather precise about this. It concerns us very much that we should keep the cost of collection as low as possible. We would regard a figure between 2 and 3 per cent as tolerable. It rose from about 2.2 per cent to about 2.6 per cent in recent years, but the Committee will be glad to hear that in the last year it has dropped to 2.05 per cent and we hope to secure that it will not go any higher than that, certainly not significantly higher. 411. Deputy Woods.—In that context of course we know that very recently you have been making some new provisions and arrangements which sound very sensible. One can spend a great deal of time chasing the last percentage of an assessment, whereas there may be quite a number of people who are not being taken in at all. These figures do not indicate that situation. Do you have any indication of what it would be? —To some extent they do, and I imagine that the Deputy is referring to the newspaper reports and radio and television announcements of yesterday, which are slightly misleading. What is involved is merely a change of practice affecting the accountancy profession and the inspectors and the way they go about their work. There have been long discussions on a general basis between them and they have agreed that certain things that were traditionally in accounts are not important from the point of view of ascertaining tax, but other things are. They have agreed that pre-eminence will be given in accounts to those things which are relevant to collecting tax, and this will mean that the inspectors can reserve their more powerful fire for these matters. The amounts which are shown in paragraph 12 in the column headed “Tax under appeal or under inquiry” should drop very significantly because of the new procedures, taken together with certain statutory provisions which were introduced between 1975 and the present day. We will probably go into the details of those and of the years to which they relate at a later meeting, but we will hope for a considerable diminution in this figure in the years to come The figure is very large but you have broken it down well. —We are also conscious that while the figure is stated in detail and to the last digit it is not a realistic figure because at the end of the day when the inquiries and the appeals have taken place the ultimate figure for collection is invariably much less. In other words, the figure given is the protective assessment figure. 412. Chairman.—When the amount outstanding is such that the cost of its collection would not be justifiable should you on a question of principle follow up the money? In other words, where does principle end and practicability begin? —We have a very low limit on what we will ignore. It may sound a little unfair but if the amount, although small, can be collected easily we will go after it but if it were to get to the stage of having to take court proceedings and so on, we would weigh carefully the cost factor. If the cost to the State for the collection of £20 will work out at £50, while we might not write off the amount due, we might roll it up into next year’s liability or until an amount would arise that would be worth going after. We keep that aspect under review because we regard ourselves as being bound rather strictly to collect what can be collected. 413. Deputy Kerrigan.—At what stage would you reach a decision to write off a small amount? —I must explain that writing off does not mean remitting but rather that we stop trying to collect. Deputy Woods.—I have merely an impression of the situation but is it the position that you tend to spend a lot of time, many revisits and much discussion, when in effect a point of agreement could possibly be reached somewhat sooner, especially with people who are prepared to pay their tax? I understand that this sort of rationalisation of methods is in this direction. —Definitely. While our inspectors must have a great deal of personal discretion we would not encourage them to drag out a case where the amount in dispute was marginal. Perhaps that is where you may decide to roll up the amount? —Yes. If liability arises in the future or if a person who has gone away owing tax comes back into the jurisdiction we have a system whereby we can continue to pursue collection of the amount involved. I was more concerned with the rationalisation process where you have someone who is prepared to clear his account. In such a situation it should be possible to reach agreement more quickly and, consequently, to be able to spend more time on those people who are either not prepared to pay their tax or who are trying to avoid paying it. —That is what we are aiming at. 414. Deputy Kerrigan.—On subhead A —Salaries, Wages and Allowances—I note that the amount Less than Granted is fairly high. The note states that the saving is due mainly to staff changes and so on. Has the position improved regarding the recruitment of staff? —Yes. It has improved from the point of view of numbers. Our difficulty is, and I think I have mentioned this before, that the recruitment of staff does not immediately solve a probelm. In our field, training is important so that a period elapses between recruitment and effectiveness. However, matters have improved greatly. Deputy Woods.—The explanations given are very satisfactory. They are complete which is not always the case in respect of other Departments. You have gone to the trouble of giving the reason for expenditure being less than anticipated. Chairman.—The explanations are comprehensive. I am afraid we cannot say that of some other Departments. —I thank the members for their kind remarks. 415. Deputy Kerrigan.—On Extra Remuneration I note that there is a high degree of overtime but I suppose that could not have been avoided? —Very often the situation in this regard is unpredictable. The only way we can have a job finished by a set date is by resorting to overtime. 416. Deputy Woods.—I do not suppose there is much point in asking how much duty you estimate you have lost by reason of smuggling across the Border, for instance. I suppose there would need to be hundreds of people engaged continuously in that area? —We are always in difficulty about a question of that kind. If I may put it in another tax field it is like asking for an estimate of the amount of income tax being evaded. If we knew that we would be in a position to go after the revenue concerned. The situation about smuggling is similar. But I am sure that there are some cases in which it is known that smuggling is being engaged in but it is difficult to be in a certain place at the right time to detect it. Chairman.—I thank the Accounting Officer for his co-operation and particularly for the comprehensive explanatory notes. The witness withdrew. The Committee adjourned. £897,506,000 was paid into the Ex-chequer during the year leaving a balance of £6,289,414 as compared with £2,800,013 at 31 December 1974. |
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