THE REVENUE Commissioners has warned its audit capacity has been affected by budget cuts and said a further reduction of €15 million would result in a probable loss of tax in the order of €400 million in 2013.
According to Revenue figures, a reduction of €41 million in its budget between 2008 and 2012 resulted in audit income falling from more than €600 million in 2009 to an estimated €400 million this year.
In a note to the Oireachtas Committee on Finance, Revenue said resources were down to the “bottom line”. It warned politicians “all cuts at this stage will have a direct negative consequence” for tax collection.
The note considered the impact of a prospective €9 million cut in external IT resources alongside a further €6 million reduction in non-IT related items. It concluded that the principal effect of the cuts would be a negative shift, or drop in compliance, resulting in an estimated €265 million in cash flow not being received in 2013.
A further €142 million would be lost to the exchequer altogether, bringing the total not available in 2013 to just over €400 million.
Asked about the warnings, Mr Noonan told the committee that a negotiating process was under way.
“As regards resources, Revenue accepts that it must play its part in meeting Government policy on public service staffing numbers and I am satisfied that Revenue to date has carried at least its share of the burden of staffing and other reductions.”
Mr Noonan said he accepted that an effective tax collection system was “critical to the successful achievement of the Government’s objectives in the context of the EU-IMF programme of financial support for Ireland”.
However, he added that while there was “undoubtedly a connection between resources and the ability to collect”, determining the appropriate level of resources for the organisation was “a complex task”.
