ANOTHER YEAR and another report on tax evasion, social welfare fraud and profligate spending by Government agencies and departments by the Comptroller and Auditor General John Buckley. There is little to welcome in the two-part review that deals with revenue raising and Government spending for 2010.
The black economy continues to thrive; public servants remain unaccountable for expensive mistakes and, to date, taxpayers have been saddled with a bank rescue bill of €65 billion.
This time, however, a new Government has given commitments to tackle many of the problems identified by Mr Buckley. Strict tendering for State projects and the introduction of accountability at political and public service level should make a difference. Consultation between agencies controlling various State databases to detect tax evasion and welfare fraud is already having an effect while new investigative and punitive powers have strengthened the hands of the Revenue Commissioners.
Social welfare payments received a lot of attention in the report, which found that 31 per cent of detected overpayments were based on fraudulent claims. In a four-year period, bogus claims remained relatively steady – in excess of €20 million – and a majority of cases attracted fines. For businesses and the self-employed, the noncompliant/fraudulent level was similar, involving VAT charges and income tax payments, but the amounts involved were staggeringly different. By April 2010, Revenue estimated it was owed €2.1 billion, one-third of which was subject to appeal.
Mr Buckley emphasises the predilection of tax evaders to re-offend and refers, as in previous reports, to the small number of special audits conducted by Revenue. Between 2007 and 2010 overall audit activity fell by 30 per cent. In that period, the average yield per audit in Dublin rose from €26,000 to €34,400. The black economy is now estimated by Revenue to be worth 13 per cent of GDP while fraud in relation to PRSI payments has been put at 15 per cent. VAT demands stand at almost €600 million and tax write-offs continue to grow because of insolvencies and failing businesses. Revenue may be under great pressure because of economic circumstances, but so too are all State agencies. Last year, it undertook to reduce the level of contested debt by 25 per cent. The actual reduction was 7 per cent.
It could be argued that Mr Buckley takes a pessimistic approach in viewing progress made in tackling public waste and various kinds of fraud. By aggregating figures, the picture may appear blacker than it is – as with the finding that, in spite of investments amounting to €1 billion over 10 years in water services, there has been little or no improvement in relation to leakages. Similarly, advances made through the introduction of new safeguards and procedures may not receive appropriate recognition. The function of the report is, however, to identify bad rather than good administrative practices. In that regard, public servants and ministers have a long way to go in meeting their responsibilities.