Carthy hits out at PUP Tax Bills as a ‘kick in the teeth’, urges Minister Humphreys to reconsider


Local Sinn Féin TD Matt Carthy has called on the Minister for Social Protection. Heather Humphreys, to reverse the decision to retrospectively tax Pandemic Unemployment Payments (PUP) received last year by those who lost their job as a result or Covid-19 restrictions.


As the payment was introduced initially as an urgent needs payment it was not liable for tax under Irish law up until August 5th.  The government amended legislation in November to allow it levy income tax on the payment prior to then.


In a Dáil Debate Deputy Carthy said that this was a ‘kick in the teeth’ for those affected, he questioned whether the Minister had objected to the retrospective taxation and he called on Minister Humphreys to ‘protect those people in receipt of payments’.


Deputy Matt Carthy


The Minister will be aware that the decision to tax the pandemic unemployment payment came as a shock to people who were already feeling very vulnerable. On several occasions, I have heard people refer to it as a “kick in the teeth”. The Minister will be aware that the PUP was introduced as an urgent needs payment. Under section 126 of the Taxes Consolidation Act 1997 such payments were exempt from taxation for the 20 weeks up to 5 August when they were put on a statutory footing.


The job of the Minister for Social Protection in many respects is to protect those people in receipt of these payments. When did the Department of Finance first bring to the attention of the Minister for Social Protection, Deputy Humphreys, its intention to tax these payments and did she raise any objection to that proposal?


In light of the statement by the Free Legal Aid Centre that the taxation of these payments for that period could be unconstitutional, did the Minister seek any legal advice in that regard?


Minister Heather Humphreys


I thank the Deputy for raising this issue. All legislation enjoys the assumption of constitutionality. The Minister for Finance determines taxation policy. The legislation has gone through both Houses of the Oireachtas. The Revenue Commissioners and the Department of Finance are of the view that it is constitutional. The Minister for Finance and the Revenue Commissioners are clear on this issue.


The position is that the PUP is taxable. It is important to remember that payments from the Department of Social Protection are, in general, taxable sources of income. For example, jobseeker’s benefit payments are taxable. The PUP follows this general taxation rule for social welfare payments.


The data show that in the case of people who are on PUP only, more of them are due a refund than are due to pay extra tax. In the case of lower-income households or those whose income solely comprises social welfare payments, a liability to tax typically does not arise because the value of social welfare payments received in a tax year is usually not liable for tax. Revenue will be adopting a fair and flexible approach to collecting tax due on payments made under the PUP scheme. Revenue has also given assurances that if any income tax and USC liability still arises following the allocation of the unused tax credits, it will work with PUP recipients to collect the outstanding liabilities.


Matt Carthy


With respect, I could have read that statement. I asked the Minister a specific question regarding when she was informed about this issue and whether she raised any objections.


Heather Humphreys

The Deputy did not have the text of the statement and could not have read it.


Matt Carthy


I am taking it that she did not raise any objections. The truth of the matter is that these payments were not taxable until the Government changed the law in November of last year.


Since then, in the early weeks of this year, people who were not expecting them have been receiving tax bills of up to €1,400.  This is a retrospective measure.  People who received the PUP as an urgent need payment in the early part of this pandemic had every right to expect that it would not be taxed.


I find it ironic that in the week following the revelation that Irish billionaires have increased their wealth by €3.3 billion, the Government has not found a way retrospectively to tax high and mega-wealthy earners within our society. There has been no proposal to tax vulture funds, cuckoo funds or banks, which are, in essence, exempt from paying tax for the next 20 years.


The Minister will have to agree that there are double standards at play. I take this opportunity to appeal to her to use her offices to ditch the taxation on the payments that were made under the PUP scheme up to 5 August last year.


Carthy hits out at PUP Tax Bills as a ‘kick in the teeth’, urges Minister Humphreys to reconsider

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