asked the Minister for Finance the reasons why the PAYE system is not in operation in the Army; and if he will consider having it put into operation.
Ceisteanna—Questions. Oral Answers. - PAYE.
9.
State employees including members of the Defence Forces were from the outset excluded from the scope of PAYE as, under statutory arrangements of long standing, tax was already deductible from the emoluments of such employees.
The existing arrangements provide for provisional tax deductions from the beginning of each tax year. The majority of members of the Defence Forces are subject to these arrangements. Only a minority who do not authorise the making of provisional deductions or fail to submit returns of income by the due date incur the risk of suffering heavier deductions in the later part of the year to take account of tax which would otherwise have been deducted during the months before formal assessments are made. This minority consist mainly of new entrants or those not previously liable to tax.
Special legislation, which would have to be of general application to all State employees, would be required to extend PAYE to the emoluments of members of the Defence Forces. I am not satisfied that this course could at present be justified as there does not appear to be any compelling evidence of a desire on the part of State employees generally for inclusion in PAYE.
Is the Minister not aware that there is a considerable amount of unrest within the armed forces——
Deputies
Hear, hear.
That is the understatement of the year.
——because of the fact that at the end of the financial year they receive a bill for £50 or £60 for tax? I would ask the Minister, in view of the hardship imposed on these Army officers, if he would consider the introduction of the PAYE system? This system could and should be operated.
As I have indicated, it is open to any member of the Defence Forces to opt to have deductions made regularly from emoluments and at the beginning of the tax year he receives a letter reminding him of this. If he fails to avail of this system I do not think he can reasonably complain when, at the end of the year, he receives a substantial bill for income tax.
The Minister has been very discreet in his reply. Is he not aware that it is a decided advantage to the Army and civil servants to have the present system operated because, while they continue to receive increases in salaries, they are taxed on the previous year's salary? Deputy Foley does not appear to understand that. He may have a few friends who got into difficulties but I can assure him that the majority of Army personnel benefit from the present system. Why did not the Minister disclose that fact to the House when he was replying?
What the Deputy says is correct but I was not asked that question.