The pandemic unemployment payment is subject to income tax, agrees the Dáil Finance Committee

The OIREACHTAS FINANCE Committee voted in favor of a section of the Finance Bill, which clarifies that the Pandemic Unemployment Pay is subject to income tax.

The weekly pay was implemented in March for workers who lost income as a result of public health restrictions imposed by the government.

Throughout his life, government ministers and Commissioners of Revenue have said that the payment, like other welfare payments, is subject to income tax.

This despite the fact that when the PUP received legal basis in August, the government characterized all payments under the scheme made between April and August as “urgent needs payments” under Section 202 of the Social Welfare Consolidation Law of 2005.

Payments of this type are generally not taxable.

The Finance Bill, which will give legislative effect to the 2021 Budget, is currently being debated by members of the Oireachtas Finance, Public Expenditure and Reform Committee.

Opposition TDs have accused the government of trying to ‘sneak in’ a section in that bill, which enshrines the imposition of the PUP in Irish law.

But speaking in front of the Oireachtas Finance Committee this morning, Finance Minister Paschal Donohoe said that the initial characterization of the PUP as a Section 202 payment was simply a matter of convenience.

“These payments were paid under Section 202 of that bill due to the need to make these payments quickly and associate them with a relevant clause in the social welfare legislation,” he said.

Unlike other Section 202 payments, he said, the PUP is not “subject to resource verification” and is therefore taxable.

“However, I want to make it clear, up front, that the government’s intent was that those payments would be taxed and treated the same way that we tax other equivalent welfare payments,” added Donohoe.

Sinn Féin finance spokesman Pearse Doherty accused the minister of “trying to go back in time and make a payment that was paid to people who lost their jobs during the pandemic, subject to tax.”

“I think there are serious problems in relation to this, particularly around the principle of retrospective taxation. Regardless of the personal intentions of the minister or the personal intentions of the government, the legal basis for this payment that was paid, which at that time was in the hundreds of millions of euros, was Article 202 of the Social Welfare Law, and therefore therefore, as a result, it was not taxed. “

The Committee voted in favor of the Finance Bill section by five to four this afternoon.

In September, Revenue confirmed that PUP recipients will have the option to return taxes owed by the end of 2020 if they wish.

Alternatively, they can allow the Treasury to deduct the liabilities through reductions in their tax credits over a period of four years.