Tag Archives: tax

Joy in heaven

I tell you that even so there will be more joy in heaven over one sinner who repents, than over ninety-nine righteous people who need no repentance.

That’s from the Gospel according to St Wikipedia.

Revenue’s figures, though, suggest that most of us are compliant, with around 99 per cent of taxpayers willingly handing over what the State believes is due.

Assuming this is true, the best way that Revenue can ensure the habit continues is to continue enforcing the rules effectively. Not because this scares people into paying, but because it reassures the vast majority who do that those who do not stand a good chance of being caught.

That’s from the Cantillon column in the Irish Times of 5 January 2019.

And to think that, just over four years ago, Cantillon was arguing for the continuance of a tax scheme under which 99 per cent of taxpayers were evaders. We rejoice at his or her conversion to the paths of righteousness.

Give that columnist a 99, Agent 99.

 

Patriyachtism

It will be recalled that, for many years, the governments of the United Kingdom of Great Britain and Northern Ireland and of Ireland subsidised the owners of private pleasure craft by allowing them to use the cheap diesel permitted for off-road use (not that farmers should get subsidies either). The EU (or whatever it was called at the time) told them to stop; they asked for, and received, several derogations to allow them time to comply; during that time they stuck their thumbs in their collective bums and did nothing. Eventually the EU got fed up and told them to get on with it.

The Irish government’s pretence at compliance was particularly ludicrous and contemptible. It said that yacht-owners (using “yacht” as shorthand for “private pleasure craft”) could continue to buy marked gas-oil (cheap or green diesel) at the rebated (cheap) price but that, once a year, they should tell the Revenue Commissioners how much they had bought, work out the amount of the underpayment and pay that sum to the Revenue.

I can’t imagine how the Revenue Commissioners thought that was going to work, but they seem to have been happy with a scheme that facilitated — nay, encouraged — tax evasion by those sufficiently well off to own yachts. Someone in the Irish Times, perhaps after having had his or her ear bent over a few pink gins at the bar of the George, referred to this as an “honour system”; there was no evidence that she or he had actually checked the compliance rate to assess the effectiveness of the scheme and the extent of honour amongst yacht-owners.

The figures for the year 2015, as of 15 April 2016, were kindly supplied by the Revenue Commissioners some months ago; here they are, with those for previous years.

For the record:

Year Payers Litres Amount
2010 for 2009 38 n/a n/a
2011 for 2010 41 n/a n/a
2012 for 2011 22 141,503.29 €53,398.58
2013 for 2012 23 301,674 €113,841.45
2014 for 2013 20 279,842.4 €105,561.74
2015 for 2014 26 289,151 €108,934.80
2016 for 2015 18 371,666 €140,021.51

I suspect that the increase in the number of litres paid for might represent the improved business for the hire fleets in 2015, but I would welcome information on the subject.

In 2015 the Irish Sports Council gave the Irish Sailing Association €1,121,900.

 

Shannon–Erne Waterway traffic

I have reported regularly on Shannon traffic figures [most recently here] but I have paid relatively little attention to the Shannon–Erne Waterway [SEW]. I am therefore grateful to Waterways Ireland for supplying me with the last five years’ monthly traffic figures for Locks 1 and 16 on the SEW. I had some queries about the figures for certain months and I have put them to Waterways Ireland, but I presume that the annual figures are OK.

Shannon–Erne Waterway traffic 2010–2014

Shannon–Erne Waterway traffic 2010–2014

Clearly, not all boats go all the way through: if they did, the figures for Locks 1 and 16 might be the same. The hire bases for Locaboat, Riversdale and Corraquill were all on the Erne side of the summit level; does Lock 1’s excess of traffic over Lock 16 suggest that hirers, perhaps wishing to minimise the number of locks they passed through, headed for the Erne rather than the Shannon? The figures, which I presume are gathered automatically, do not distinguish between private and hired boats.

The other point that strikes me is that the level of traffic is actually quite low. I put in the figures for Pollboy and Athlone locks to allow comparison. SEW traffic is greater than that on the Lough Allen Canal, but it is not much greater than that on the River Suck to Ballinasloe. In that case, WI is [according to its Business Plan 2015] considering automating Pollboy Lock to reduce costs.

Pollboy lock passages 2005–2014

Pollboy lock passages 2005–2014

The SEW locks are already automated, but the costs and benefits may have to be re-examined, especially now that Locaboat has moved from Ballinamore to Quigleys Marina at Killinure on Lough Ree: I presume that that will result in less traffic on the SEW.

Pollboy and the CLones Sheugh

In 2006 Pollboy traffic was used as the basis for estimating likely traffic to Clones on the Ulster Canal’s “SW section”:

The total number of boat parties/groups for the SW section is assumed to be 600. This is based on a comparison with another “offshoot” like the Suck Navigation which had around 1,250 boat parties/groups in 2005 (obtained by dividing the passages through Pollboy Lock by 2) in a much busier section of the whole system. So, for the SW section, a level of around 50% (ie. 600) is regarded as a reasonable assumption.

Waterways Ireland Socio economic Summary Report for the NE and SW Sections of the Ulster Canal Final Report February 2006

Now that Pollboy’s traffic is half what it was in 2005, no doubt the estimate for the number of boats that would visit Clones, if a canal ever reached it, has likewise been halved, which would give an average of about ten boats a week over a seven-month season: four boats every Saturday and one a day for the rest of the week. Folk intending to build restaurants to cater for the cruiser traffic might be wise to reassess their investment plans:

In overall terms, the benefits of waterway restoration derive from the fact that these can facilitate a variety of leisure and recreational activity, that the users will benefit from this activity, and that there will also be wider spin-off benefits in the areas, e.g. facilities such as restaurants etc built to service canal traffic.

Department of Arts, Heritage and the Gaeltacht Restoring the Ulster Canal from Lough Erne to Clones Updated Business Case February 2015

There’s not enough business there for a burger van, never mind a restaurant.

The magic of the Shannon–Erne Waterway

But if Pollboy, the River Suck and Ballinasloe are no longer cited as support for the construction of a Clones Sheugh, the Shannon–Erne Waterway is still used as an example, in that and in other contexts. Take, for example, this:

Shannon–Erne Waterway magic

Shannon–Erne Waterway magic

I’ve nicked that from a slide show called Economic, Recreational and Social Benefits of Rural Waterways in Ireland, which was to be delivered [PDF] by Garret McGrath of Waterways Ireland at the World Canals Conference [PDF] in Milan in 2014.

Now, if the Shannon–Erne Waterway had caused all that construction activity, we’d have to drag Waterways Ireland before the Irish banking enquiry. Skipping lightly over the question of the ghost estates, and the departure of Locaboat from Ballinamore, we come to the real problem with this sort of stuff: the post hoc fallacy. We are invited to believe that

  • a waterway was built
  • prosperity followed
  • so the waterway must have caused the prosperity.

Well, maybe it did and maybe it didn’t, but the argument presented in the slide show isn’t sufficient to prove it. You would have to check to see whether there were any other possible explanations: any other changes that might have resulted in all that construction.

Along the Shannon–Erne Waterway, I can think of two other possible factors: Sean Quinn’s business empire and the Upper Shannon Rural Renewal Scheme, a tax dodge that applied in Leitrim, Longford, Roscommon, Cavan and Sligo, five of the six counties that had the highest rates of vacant housing (excluding holiday houses). So there are two problems here:

  • much of that construction activity may have been driven by tax breaks rather than by the existence of a nearby waterway
  • the construction itself may not have had beneficial effects.

You can read more about that here, noting in particular, on the map, the areas around the upper Shannon and the SEW with vacancy rates of over 25%; you might wonder whether Waterways Ireland is wise to claim credit for housing over-development.

But my main concern here is a different one: that, if you want to claim credit for economic benefits that followed waterways development, you have to measure the benefits and subtract those attributable to other factors, such as Sean Quinn and the Rural Renewal Scheme. Then it would be useful if you compared the remaining benefits with the cost of constructing your waterway: it might then be possible to say that waterways development is a good investment.

It may be that such a study has been done on the SEW, but if it has I don’t know where it is; I would like to see it if it exists. Until then, I regard this sort of thing, from DAHG’s Business Case, as drivel:

The broad existence and nature of the potential socio-economic benefits of canals and restored waterways are therefore well established and not really at issue.

Sorry, minister: that’s rubbish. As far as I know no proper evaluation has ever been carried out on the costs and benefits of any restored or new-built Irish waterway. So you’re not getting away with that one.

 

A call to patriotic action …

… said Brian Lenihan of his 2009 Budget, which did not greatly impress Michael Hennigan of FinFacts, who had a highly entertaining, if sadly prescient, article here.

 […] political self-interest, incompetence, negligence and laziness […] litany of failure, smugness, hubris and neglect […] the incompetence of the toxic cocktail of former school teachers, small town solicitors, social workers and bookkeepers […]

How true those words are, even today. (The “toxic cocktail” was the membership of the government.)

Anyway, on 24 April I heard Josephine Feehily of the Revenue Commissioners saying on the wireless that the minimum rate of compliance for self-assessed taxes was 80%. I fear that she may not have taken account of the Mineral Oil Tax, which has been largely ignored by the citizenry.

Just to recap, this idiotic tax is the result of governmental cowardice and unwillingness to tell even a small, insignificant interest group to get stuffed. For historical reasons, owners of diesel-powered boats, in some countries, were allowed to use rebated (“red” or “green” low-tax) diesel, AKA marked gas oil. The EU said, many years ago, that this subsidy should no longer be given to owners of private pleasure craft. The governments concerned accepted that, but asked for time to introduce the change. When that period ran out, without their having done anything about it, they asked for a further deferral, and then yet another. The EU finally got fed up and told them to get on with it.

The Irish government, with that low cunning and contempt for the law that has so endeared us to other EU states, decided to reject the obvious method of implementing the new rule, which would have been to charge owners of private pleasure craft the full (non-rebated) price at the pump. Instead, it came up with a scheme that had no chance of working properly: it allowed owners of private pleasure craft to continue to buy diesel at the low price provided that they made returns, once a year, showing the amount of diesel they had bought and paying the difference between the rebated price and the full price. This difference is called the Mineral Oil Tax [PDF].

Such a scheme might have had a chance of working in Switzerland or Germany, places where citizens often obey the law even when nobody is looking, but it had no chance at all in Ireland. And so indeed it proved to be.

In 2010, 38 boat-owners paid the tax for 2009.

In 2011, 41 boat-owners paid the tax for 2010.

In 2012, 22 boat-owners paid the tax for 2011. The total amount received was €53,398.58 on 141,503.29 litres of diesel. That’s an average of 6432.1 litres per return, which is very high; I think that a lot of that is accounted for by the hire fleets.

I now have the latest figures.

In 2013, 23 boat-owners paid the tax for 2012. The total amount received was €113,841.45 on 301,674 litres of diesel.

It is gratifying to note that the number of returns has increased, even if it is still a tiny proportion of the total number of owners of diesel-powered private pleasure craft. But the increase in the amount received and in the number of litres returned is staggering: both figures have more than doubled. I am unable to explain the increase.

As I said last year, this ridiculous tax should be scrapped; those operating private pleasure craft should be required to use non-rebated diesel. Taxes that cannot be collected bring the whole system into disrepute and strengthen citizen contempt for the state and for society. In taxation, you’ve got to grab them by the balls; then their hearts and minds will follow. That’s why VAT and PAYE are so effective.

 

Fuel shortage continues

As far as I can see, from the new list published by Revenue today. there is still only one trader along the Shannon who is licensed to sell marked fuel (green diesel).

More on Mineral Oil Tax

I showed here that very few boat-owners paid the Mineral Oil Tax for 2009 (38) and 2010 (41). I now have the figures for 2011 (MOT paid by 1 March 2012) and I can report that there has been a very significant change, of 46%, in the numbers paying the tax.

Unfortunately the change was downwards, from 41 to 22. The Revenue Commissioners tell me that

[…] there were 22 returns received by 1 March 2012 for 2011, amounting to €53,398.58 MOT [Mineral Oil Tax] on 141,503.29 litres oil.

That’s an average of 6432.1 litres each, which is a lot; I suspect that much of the total came from the hire fleet, with less than twenty private owners making returns.

This ridiculous tax should be scrapped; those operating private pleasure craft should be required to use non-rebated diesel.

 

 

The Upper Shannon Renewal Scheme

The next time some idiot politician curries favour by promising special tax breaks for some favoured area, just mention the Upper Shannon Renewal Scheme. I mentioned before that IrelandAfterNama had covered it; now NamaWineLake, one of the best sites covering the wreckage of the Irish property market, has pointed to the evidence provided by the returns of stamp duty on property sales in 2010. Counties Leitrim and Longford — both covered by the scheme — each paid only €600,000 in stamp duty in 2010:

Practically nothing was sold in Longford and Leitrim which recorded the lowest stamp duty receipts of €0.6m apiece. If the receipts were all for residential property and the average transaction price was €200,000 then that would mean about 100 homes were sold in 2010 in each county.

So as well as spoiling the scenery by cluttering the place with colonies of white houses for white settlers, the scheme has also ruined the property market for the natives. Anyone needing to sell a house, perhaps to move in pursuit of employment, will find it more difficult to sell.

 

Subsidising boat-owners

I wrote here about the method that the Revenue Commissioners employed to implement new rules on the rate of duty to be paid on diesel used for private pleasure navigation.

For reasons best known to themselves, Irish governments allow farmers to use cheap (“rebated”) diesel in their tractors, on the grounds that the tractors are for off-road use. And for many years boat-owners with diesel engines were allowed to use the same cheap diesel. The same arrangement applied in the UK and in Belgium. The diesel (“marked gas oil”) was coloured, latterly red in the UK and green in Ireland.

The EU decided some time ago that the rules should be standardised throughout Europe and that boats used for private pleasure navigation should not be allowed to use the subsidised fuel. The UK and Ireland sought and received successive derogations allowing them to delay the introduction, allegedly so that they could make appropriate arrangements. The governments did nothing about it. Accordingly, when the European Commission got fed up and told them there would be no more derogations, they had no plans ready and were faced by well-organised gangs of well-to-do boat-owners anxious to continue enjoying their subsidy.

The Irish authorities decided that boat-owners could continue to buy the marked gas oil, at the rebated rate, but that they would have to make a return to the Revenue Commissioners at the end of each year, showing how much diesel they had bought and how much Mineral Oil Tax they were paying to make up the difference. The December 2011 version of the document and forms is here (PDF). Mineral Oil Tax is intended to cover “the difference between the auto diesel and marked gas oil rates at the time of purchase of the oil”.

I asked the Revenue Commissioners how much they had taken in from boat-owners in 2009 and 2010. They said that they got  €169,895.51  in 2009 and  €140,929.12  in 2010.

For most of 2010, the rate of Mineral Oil Tax was  €449.18 per 1,000 litres  (it was slightly higher from 8 to 31 December 2010, a period when there would have been little pleasure-boating). That means that duty was paid on 313,748 litres of diesel.

So how effective is this system? On what proportion of sales for private pleasure navigation is the tax being collected? Revenue has no idea  and has no way of getting any idea because

Mineral Oil Tax on marked gas oil (MGO) is collected at the point of release for consumption from tax warehouse or upon importation to the State and, for the vast bulk of MGO, no information is available at that stage as to the ultimate destination or use of the oil, as most of it goes through a distribution network before it reaches the final consumer.

So let’s see if we can help to provide a rough estimate. According to the RNLI

A diesel engine burns about 1 gallon per hour for every 20hp. So a 90hp diesel would use about 90/20 = 4.5 gallons of fuel per hour. For those who prefer to work in litres then simply multiply the horsepower by 2 and then divide by 9. So a 90hp has an estimated consumption of 2 x 90/9 = 20l/hour.

Let us suppose, for the sake of argument, that the average pleasure craft has a 40hp diesel engine (which is what my 1960s cruiser had). That would use two gallons or nine litres per hour. So the  313,748 litres of diesel on which Mineral Oil tax was paid would have kept one cruiser going for 34,861 hours.

On the other hand, if there are 10,000 pleasure craft in Ireland, with diesel engines averaging 40hp, then they are claiming to have cruised for an average of three and a half hours each in the whole of the year 2010.

I suspect therefore that there is significant underpayment of the Mineral Oil tax and I suggest that the system should be abolished: boat-owners should pay the full (auto diesel) price.

 

 

 

Mid Shannon Corridor Tourism subsidy

 

I have been trying for some time to find out whether anyone has taken advantage of the Mid-Shannon Corridor Tourism Infrastructure Investment Scheme. I sent this email to the Department of Transport, Tourism and Sport in July 2011; I received no reply, so I have sent it again today.

===begins=====

Your website’s list of contacts does not include an email address for the section of your department that deals with tourism [it still doesn’t, on 1 Novemebr 2011], so I would be grateful if you would pass this query to the appropriate person.

I have some questions about the Mid-Shannon Corridor Tourism Infrastructure Investment Scheme. I would be grateful if you could tell me how many applications for approval in principle have been received.

Could I have a list of the applicants and their proposals please?

How many applications have been approved?

Could I have a list of them please?

On how many projects has expenditure been incurred?

Could I have a list of them please?

===ends=====

 

Paying up

Text of email sent today to the Revenue Commissioners press office:

===begins=====

I would be grateful if you could tell me:

– how much marked gas oil was supplied to sellers of diesel fuel along Irish inland waterways in years ending 31 December 2009 and 2010

– what rates of duty applied in those periods

– how much duty was paid by owners of private pleasure craft for each of those years using form PPN1 Mineral Oil Tax Return.

===ends=====