Dáil Éireann debate -
Tuesday, 6 Jul 1993

Vol. 433 No. 5

Written Answers. - General Medical Service.

Pat Gallagher

Question:

41 Mr. Gallagher (Laoighis-Offaly) asked the Minister for Finance if his attention has been drawn to the discrimination against general practitioners in the General Medical Service because withholding tax deducted from their payments is not allowable against tax liability until the following year, unlike other categories of self-employed; the changes, if any, he proposes to make to this system; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

The withholding tax applies to the medical profession in exactly the same fashion as to other professionals. It does not impose any additional tax liability on doctors or on the other professionals to which it applies. It involves no more than the withholding, on account, of an amount against tax due. Full credit for the amount withheld is given in computing the final tax liability.

When the tax was introduced in 1987, the self-employed (including doctors) and companies were being taxed on a previous year basis. The withholding tax was held on account to be set against the actual tax liabilities which came due the following year. When the self-employed moved to a current year basis in 1990 the Government decided that there would be no change in the withholding tax — the credit continued to be available the following year. If the withholding tax had been changed to a current year basis, it would have been at a cost to the Exchequer of about £46 million.

There are safeguards to ensure that no adverse effects arise from its operation. Principal among such safeguards is the provision for the payment of interim funds. The availability of interim refunds puts a limit on the amount of the withholding tax that can be retained on account by the Revenue Commissioners. That limit is the equivalent of the income tax liability for the previous year. Once the withholding tax exceeds the taxpayer's tax liability for the previous year, he or she may apply immediately for a refund of the difference.

I have no intention of revising the withholding tax as it currently operates.