Hugh O'Connell
December 20 2020 02:30 AM
A row over the Government's decision to retrospectively tax the Covid-19 Pandemic Unemployment Payment (PUP) led to Sinn Féin and other opposition TDs voting against a €30-a-week tax cut for people who lost their jobs as a result of the pandemic.
Fianna Fáil Minister of State Seán Fleming has criticised opposition parties for their decision to vote against allowing PUP recipients to use tax credits to offset their liability, but Sinn Féin and Labour said this was deflecting from the controversial decision to retrospectively tax the PUP.
The payment for those who have lost their jobs as a result of Covid restrictions was originally introduced on March 13 as an urgent needs payment, making it exempt from income tax under the Social Welfare Act.
The payment was put on a statutory footing in August and, like other core social welfare payments, was made liable for income tax. But the decision to apply this retrospectively between March and August has been heavily criticised, including by the Free Legal Advice Centre, which has questioned whether the move is constitutional.
The Government included in Section 3 of the Finance Bill a provision to allow PUP recipients to use their employee tax credits, or the earned income tax credit, to offset their tax liability.
But the decision by Sinn Féin, Labour and other opposition TDs to oppose that entire section of the bill, which passed through the Oireachtas earlier this month, meant that had the Government not won the vote, people receiving PUP would end up paying €31.73 in tax each week.
"I was genuinely surprised to see Sinn Féin voting to increase taxation on people in receipt of the PUP. Either they knew precisely what they were doing or they didn't understand what Section 3 of the Finance Bill was all about," Mr Fleming told the Sunday Independent.
However, Sinn Féin TD Pearse Doherty said: "This is a desperate attempt by Fianna Fáil to justify the retrospective taxation of hundreds of thousands of people who lost their jobs because of the pandemic."
He said Section 3 of the Finance Bill "involved Government going back in time and taxing this payment despite these laws".
"As a result, some PUP recipients will now face tax bills of up to €1,470. This is unprecedented, with concerns also having been raised by FLAC (the Free Legal Advice Centres)," he added.
"That is the issue which Fianna Fáil is trying to brush under the carpet. This Government has no issue with allowing banks and vulture funds to go without paying a cent of tax on their profits.
"But with this Finance Bill they made clear their intent to retrospectively tax a payment that was never liable to tax under the law."
Labour's finance spokesman Ged Nash said Section 3 of the Finance Bill was "predominantly" about allowing the Government to tax PUP.
"The difficulty is that what was initially an urgent needs payment has been transformed to something else to allow the Government to tax it. We understand and accept the principle that most social welfare payments are taxable. The difficulty we have here is the way we have done this, retrospectively.
"What I won't do is take lectures from Seán Fleming and Fianna Fáil about the treatment of working people. After all, this is the party that had no compunction to vote to slash the minimum wage by €1 per hour during the last crisis."
Finance Minister Paschal Donohoe has previously said the PUP was originally paid as an urgent needs payment because of the need to implement it quickly when the Covid restrictions began last spring, resulting in thousands of jobs being lost overnight.
He said that from the very start of the pandemic the Government intended that those payments would be taxed and treated in the same way as other equivalent social welfare payments.
