Ruth Coppinger (Dublin West, Socialist Party)
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102. To ask the Minister for Finance noting the lower returns to the Revenue Commissioners in recent years, arising from an increase in sub-contracting and self-employment in the construction sector, and the resultant increased use of relevant contracts tax, his views on the measures the Revenue Commissioners and his Department have taken, or are taking, to ensure that relevant contracts tax is not used in a manner to deny workers in the sector the basic rights enjoyed by construction workers who are directly employed with registered employment agreement rates, sick pay and holiday pay; that the use of relevant contracts tax, rather than the prevalence of direct employment in the sector, does not result in the Exchequer foregoing revenues it would otherwise receive under the universal social charge, pay-related social insurance and pay as you earn. [24699/15]

Ruth Coppinger (Dublin West, Socialist Party)
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Noting the low returns in recent years from relevant contracts tax, RCT, arising from an increase in sub-contracting and self-employment in the construction sector, will the Minister make a statement on what measures the Revenue Commissioners and the Department of Finance have taken or will take to ensure that RCTs are not used in a manner that denies workers in the sector the basic rights enjoyed by directly employed construction workers, such as REA rates of pay, sick pay and holiday pay, and also results in a significant loss of tax revenue - USC, PAYE and PRSI - compared to a situation where direct employment prevails in the construction sector?

Michael Noonan (Limerick City, Fine Gael)
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I have not seen any evidence of a negative impact on Exchequer returns and a change to self-employment in the construction sector and I cannot, therefore, accept the Deputy's assertion in that regard. I assume that the Deputy's reference to ensuring that RCT is "not used in a manner to deny workers in the sector basic rights" relates to the RCT system which is a tax deduction at source system that applies to payments made under a relevant contract in the construction, meat-processing and forestry sectors. As with any contract of engagement in the construction sector, whether a person is engaged under either a contract of service and is, therefore, an employee; or a contract for service and is, therefore, a self-employed person, is determined by the facts and evidence of each case and not by the RCT system of tax deduction. Guidance on whether a person is engaged as an employee or as a self-employed contractor is provided in the code of practice for determining employment or self-employment status of individuals, which was prepared jointly by the Irish Congress of Trade Unions, business representative bodies and relevant State agencies.

Both the electronic RCT, eRCT, system and the PAYE system of tax deduction at source are underpinned by tax legislation and not by employment legislation.

Neither such system determines whether a person in the construction sector, or, indeed, in any other sector, is engaged as an employee or as a self-employed contractor. On that basis, it is incorrect to attempt to link the RCT system of tax deduction with any denial of workers' statutory employment entitlements, such as rates of pay, holidays, holiday pay or sick leave.

As I have outlined in my responses to previous parliamentary questions in regard to the operation of the RCT system, monitoring of the construction sector for abuses of the tax and duty systems forms part of the Revenue Commissioners' ongoing compliance programmes. The Revenue Commissioners commit significant resources to compliance interventions in the construction sector. There were more than 15,000 tax compliance risk interventions in the sector in 2013 and nearly 17,000 such interventions in 2014. In addition, the Revenue Commissioners work closely with the Department of Social Protection and the National Employment Rights Agency, including by conducting joint operations in the construction sector.

Additional information not given on the floor of the House

If the Deputy has specific information relating to individuals or businesses groups in any sector who are involved in tax evasion, she should send that to the Revenue Commissioners, which has provided a tailored template on its website to facilitate reporting of tax evasion. The relevant links are provided for the Deputy's information:

Ruth Coppinger (Dublin West, Socialist Party)
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Last year's J.J. Rhatigan dispute, which lasted over six months, brought to public attention the reality of life for construction workers under the so-called recovery. These skilled workers, thanks to a system of subcontracting and bogus self-employment, even if they do not want to be self-employed, are forced to live on an income that does not meet the rates provided for in the registered employment agreements, but, more importantly, does not even meet the minimum wage requirements.

It is not only the case that construction companies are profiting from exploiting workers; it is also the case that State is facilitating that, and, in so doing, depriving the Exchequer of funds that one would think we would be killing ourselves to bring in. We have seen it in the Department of Education and Skills, in particular, with many school contracts being awarded to construction companies that operate these systems. Thanks to the Construction Workers' Alliance, a number of questions have been tabled by Deputies, which revealed that workers earn so little that they are not liable to pay the RCT and receive rebates, resulting in negative returns for the Exchequer to the tune of €100 million from 2008 to 2014, inclusive.

Michael Noonan (Limerick City, Fine Gael)
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As I stated already, guidance on whether a person is engaged as an employee or as a self-employed contractor is provided in the Code of Practice for Determining Employment or Self-Employment Status of Individuals, which document was prepared jointly by the Irish Congress of Trade Unions, business representative bodies and relevant State agencies. The guidance on the different conditions of work is provided not in tax law but in that document.

If the Deputy is aware of any particular abuses, the Revenue Commissioners would welcome any submission from her. The Deputy can contact the Revenue Commissioners through the webpage . I can give the Deputy a copy of this if there are particular instances that she wants to pursue.

Ruth Coppinger (Dublin West, Socialist Party)
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Cynicism about politics and this Chamber is at an all-time high, and it is unbelievably patronising of the Minister to come out with an answer in which he spent time telling me the address of the Revenue Commissioners' website.

If one examines what the State is losing in tax receipts for directly employed workers in the sector in the period I mentioned - 2008 to 2014, inclusive - it amounts to €2.5 billion. What is going on here is that the Government is encouraging a race to the bottom of a cheap-labour economy to back up the so-called recovery, because the Minister does not seem perturbed that the Revenue Commissioners are losing this money. What is most worrying for the workers involved who pay the price is that the Minister makes it sound as though they have a choice. They show up, and if they do not agree to go along with these conditions they are sacked. That is what happened in Rhatigan's last year, of which we spoke in the Dáil. One recruitment company, CLS Recruitment, which is only down the road, boasts that the advantages for employers of using this system include no PRSI, no holiday pay, no pension, no bank holiday pay and the ability to both hire and "off-hire" - that means sack - staff at one hour's notice throughout the country. They are encouraging the race to the bottom.

So, it seems, is the Government in order to have a so-called economic recovery.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy has made a series of unsubstantiated allegations again, none of which is true as far as I am concerned. I am not patronising her in any way whatsoever. The Leas-Cheann Comhairle cut me off before I had completed the answer, the end of which would have pointed out-----

Michael Kitt (Galway East, Fianna Fail)
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Under Standing Orders.

Michael Noonan (Limerick City, Fine Gael)
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I know. I am not objecting. I am completing the answer by giving the Deputy the e-mail reference.

Ruth Coppinger (Dublin West, Socialist Party)
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I know.

Michael Noonan (Limerick City, Fine Gael)
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Deputy Coppinger has made allegations of widespread abuse arising from the fact that persons who should be treated as employees-----

Ruth Coppinger (Dublin West, Socialist Party)
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Not for the first time.

Michael Noonan (Limerick City, Fine Gael)
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-----are being treated as self-employed to their disadvantage. Normally, the charge is that people who should be treated as employees want to be self-employed for tax purposes.

Ruth Coppinger (Dublin West, Socialist Party)
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They do not.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy has reversed that, saying that they are being exploited. If she has facts to support that, she should go to Revenue. I am giving her the reference to do so.

Ruth Coppinger (Dublin West, Socialist Party)
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Revenue is well aware of it.