Dáil Éireann Debate, Tuesday - 30 April 2013
149. Deputy Dominic Hannigan asked the Minister for Finance his plans to exempt women who do not receive a full salary top-up from maternity benefit tax; and if he will make a statement on the matter. [19789/13]
View answer174. Deputy Róisín Shortall asked the Minister for Finance if he will outline the full impact of tax proposals on maternity benefit; if his attention has been drawn to the negative impact this change will have specifically on women who receive no top-up from an employer and who are dependent solely on statutory maternity benefit. [20047/13]
View answer193. Deputy Nicky McFadden asked the Minister for Finance his views on the situation of women who do not receive a full salary top-up from maternity benefit tax; if those who do not receive salary top-ups from their employer should be made exempt from the tax; and if he will make a statement on the matter. [20135/13]
View answer210. Deputy Tom Fleming asked the Minister for Finance if he will reconsider the issue of taxing maternity benefit based on a submission (details supplied); if he will exempt women who do not receive a full salary top-up from maternity benefit tax; and if he will make a statement on the matter. [20388/13]
View answerI propose to take Questions Nos. 149, 174, 193 and 210 together.
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 are reckonable as income for tax purposes. These include long-term payments such as Disablement Benefit, the State Pension, Widows, Invalidity and Blind Pensions, Carers Allowance and the One Parent Family Payment, as well as short term benefits such as Job Seekers Benefit. Treating these payments as income for tax purposes is essentially a matter of equity.
As a result of maternity benefit payments becoming liable to income tax for all claimants, from 1 July 2013, a number of possible tax outcomes could arise:
1. An individual may pay no income tax on their maternity benefit payment as their tax credits will be sufficient to reduce their tax liability to zero.
2. An individual may pay income tax on some or all of their maternity benefit payment solely at the standard rate.
3. An individual may pay income tax at the standard rate on a portion of the maternity benefit and the higher rate on the balance of the maternity benefit payment.
4. An individual may pay income tax on all of their maternity benefit payment at the higher rate.
I am fully aware that some employers do not pay a top up payment to their employees whilst on maternity leave. However, in such circumstances many mothers will not be subject to income tax on their maternity benefit payments as their personal credits will ensure that no tax arises on the social welfare income itself. Of course, the extent, if any, to which taxation actually arises in a given case, depends on the total level of income that the individual or couple concerned has in the relevant tax year or years.
I would point out that maternity benefit payments will remain exempt from Universal Social Charge and PRSI.
Given the current budgetary constraints I have no plans to introduce a tax exemption along the lines proposed.
