Dáil Éireann Debate, Thursday - 21 January 2021
77. Deputy Denis Naughten asked the Minister for Finance the steps he is taking to assist persons facing income tax demands as a result of the pandemic unemployment payment and wage subsidies; and if he will make a statement on the matter. [3260/21]
View answer85. Deputy Ged Nash asked the Minister for Finance if he will consider designing a scheme to remove the tax liabilities from workers who have had their salaries paid under the temporary wage subsidy scheme, as a one-off solidarity gesture and capped to exclude higher earners; if he will include the pandemic unemployment payment recipients in such a scheme; and if he will make a statement on the matter. [3443/21]
View answerI propose to take Questions Nos. 77 and 85 together.
Income received under the Temporary Wage Subsidy Scheme is subject to income tax and USC. The Pandemic Unemployment Payment is an income support that shares the same characteristics as jobseekers benefit and similar to jobseekers benefit, is taxable income. This ensures consistent treatment with other workers whose pay was not subsidised by the State, including those in receipt of pay commensurate with the levels of income paid out under the measures such as minimum wage workers.
Tax was not collected in real-time through the PAYE system while the TWSS was in operation. Instead, liability to tax will be calculated by Revenue through the regular end of year review process. This decision was taken in order to maximise the amount of financial support that was provided to recipients at a time when it was considered that they needed such support most.
Revenue’s recent notification to taxpayers of the preliminary assessment of their 2020 tax liability shows that a substantial majority of all taxpayers (80%) have either no additional tax to pay or have an outstanding liability of less than €200.
Although the final calculation of the end of year liability for each person is dependent on their personal circumstances, it is noted that almost half of those in receipt of the PUP or TWSS have no outstanding liability to discharge (in fact over a third are due a refund).
In the case of the remaining taxpayer units with an outstanding liability, the data indicates that amounts to be collected are modest in scale, with 44% owing less than €500 and 72% having a liability of less than €1,000.
If paid over the 4 year period beginning in 2022, the majority of those cases will owe less than €5 per week, with nearly half paying less than €2.50 per week. These figures represent a preliminary liability and may be further reduced by additional tax credits or reliefs such as health expenses.
For those with liability in excess of those amounts, their average taxable income in 2020 was higher than those with the more modest liabilities, indicating income from sources other than the State income sources. It is also noted that those with the highest outstanding liability are those with the largest average taxable incomes, typically well in excess of average incomes (in the majority of cases with average taxable income of over €70,000 per annum).
I am satisfied that Revenue have adopted a fair and flexible approach to the collection tax due on payments made under the TWSS and PUP and do not plan to make any changes in that regard.
