FLAC encounters "contradicting and confusing explanations" for the PUP tax
Legal Rights Group FLAC has criticized ministers for making "contradicting and confusing explanations" for the retrospective taxation of the Covid Pandemic Unemployment Payment (PUP).
Secretary of Social Protection Heather Humphreys told RTÉs News at One that the government "has always been clear that this payment will be treated as income from Revenue, similar to Jobseeker's Allowance," and that the retroactive nature of the legislation that taxed the PUP was "It is a matter of revenue".
However, Eilis Barry, CEO of FLACMs. Humphreys, who has been raising this issue for several months, said the comments "have no legal basis". She stressed that the payment is only subject to income tax under Section 3 of the Finance Act 2020, which has been applied retrospectively.
Christopher Bowes BL, FLAC Legal Secretary, said, "The reality is that most statutory social benefits are classified as income by revenue, but payments such as unemployment benefits and bonuses are explicitly tax exempt regardless of that categorization.
“The legislation on which the PUP is based was only introduced in August 2020 and at that time, for legal reasons, was regarded as an urgent need payment, a form of supplementary social assistance that is also expressly exempt from income tax.
“It is also wrong of the Minister of Social Protection to suggest that the retroactive taxation of the PUP is a matter of revenue. The taxation of the payment has been effected by legislation and Revenue has no discretion in this regard as it has to implement the legislation passed. FLAC's concerns on this issue were presented to the government well in advance of the entry into force of this legislation. "
Ms. Barry said, “Today's News at One interview is the latest in a series of contradicting and confusing statements by the government regarding this matter that have no legal basis.
“Treasury Secretary of State Seán Fleming TD previously falsely asserted that Section 3 of the 2020 Act is not retroactive and that the legislation in force at the time the PUP was introduced would always be subject to income tax.
“In discussing a separate provision of the Finance Act, the Minister of Finance also endorsed the principle that 'amendments to tax law are generally made prospectively so that they only apply from the date on which they are legally effective', but this is the case is declined to apply this principle to the taxation of the PUP.
"When I wrote to the Treasury Secretary last year to set out FLAC's concerns in Section 3 of the 2020 Finance Act, his office referred me to the Minister of Social Protection's office."
She added: "It is up to the government to recognize that applicants for the PUP could not have known that the payment would be taxable when it was introduced, and that this appeared to be beyond doubt when the PUP was put on a legal status in August 2020, but that this position was reversed in December 2020 when it was decided to make the PUP taxable retrospectively through further legislation.
"You should also seek advice immediately on the constitutionality of this move, taking into account the stress and confusion that has been caused so far."