The Government moved to defend the Revenue Commissioners yesterday, with the Minister for Finance, Mr McCreevy, insisting that the recent report of the Comptroller and Auditor General "expressed general satisfaction" with the tax-collecting agency. The report said £1 billion in taxes had gone uncollected.

"While the [report] did identify shortcomings in some aspects of remittance processing and information analysis on the tax debt, I am informed by the Revenue Commissioners that in many instances these shortcomings in long-standing procedure had been identified by Revenue's own internal reviews and that corrective action had already been initiated," Mr McCreevy replied to questions in the Dail.

The Revenue Commissioners were confident that the body's ongoing computerisation programme would address these issues, he added.

"On the overall management of the debt, the Comptroller and Auditor General has expressed broad agreement, subject to adequate safeguards, with the new approach being followed by the Commissioners in regard to the write-off of old, uncollectable arrears," Mr McCreevy continued.

The bulk of these arrears were unreliable estimates from the pre-Self-Assessment era, and a substantial element related to companies that had ceased trading, he continued.

"By eliminating the need to divert resources to debts that are uncollectable, a more focused approach can be maintained on arrears that are collectable and also on current taxes," the Minister said.

He said significant progress had already been made through actual collection and write-offs in appropriate cases. The total of outstanding taxes had fallen from £3.5 billion in 1995 to £1.69 million in 1997. The outstanding debt now represented 15 per cent of annual total taxes collected, compared with 57 per cent in 1989, he added.