Vol. 533 No. 6
48 Mr. Broughan asked the Minister for Finance the plans he has to change the practice whereby a taxpayer who has received unemploy ment benefit in part of a tax year and then returns to work had an amount equal to the benefit deducted from his tax free allowance. [5747/01]
It is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments, including unemployment benefit, are, therefore, reckonable as income for tax purposes. Treating such benefits as income for tax purposes is essentially a matter of equity. A person who has been in receipt of UB and then takes up employment is treated as if the moneys from unemployment benefit had arisen from employment. The extent, if any, to which taxation will actually arise in a given case will essentially depend on the level of other income that a recipient or the recipient's spouse has in the same tax year.
Unemployment benefit was made taxable with effect from 6 April 1994. There have been a number of changes in the arrangements for the taxation of this benefit since then. Unemployment benefit paid to those on systematic short time work was made exempt from taxation in the Finance Act, 1994. This measure, which initially had effect only for the 1994-95 tax year, has been extended in each subsequent Finance Act. This relief relates to the unique position of those on systematic short time work.
In the 1995 budget, to assist families, the child dependant additions payable with UB were made exempt from tax. Second, the first £10 per week of UB was also made exempt from tax from 6 April 1995. I have no plans to change this at present.
