Strong economic growth boosts the tax yield as the annual report of the Revenue Commissioners shows once again. Tax revenue increased in 2015 for the fifth consecutive year, rising by 10.6 per cent to €45.79 billion. Nothing, perhaps better illustrates Revenue's ability to ensure tax compliance than its success in collecting the local property tax where 97 per cent of property owners paid what was due last year.
By contrast, the failure at Irish Water to collect money owing from its customers is striking – less than two thirds of households liable for water charges have paid their bills.
Revenue speaks softly but carries a big stick. It manages to be both effective, respected and feared as a tax collector. As most people are PAYE taxpayers, where tax is deducted at source, they have little contact with the tax authorities. Others – self-employed and companies – are subject to self- assessment.
Revenue closely monitors their overall returns to ensure full tax compliance – by means of inquiry, audit or investigation. Tax defaulters face penal financial sanctions and the possible publication of their names. Revenue made almost half a million compliance and audit interventions last year which yielded €642 million in tax, interest and penalties.
The tax authorities are now set to increase their efforts to ensure compliance with a much greater focus on high salaried professionals, many of whom operate outside the PAYE system. In that regard Revenue will be helped by the wider exchange of international information available under tax cooperation agreements.
An EU directive, allowing information sharing between tax authorities, should provide access to data on foreign earnings, property transaction and pensions. That, allied to other new information sources – including its stated interest in the Panama Papers – should provide scope for further investigation.
In the 2016 budget, Revenue received extra funding for audit and investigation activities. This may be used, as its chairman Niall Cody has intimated, to help "shine a light on individuals and businesses that have used offshore facilities".