Hundreds of thousands of workers have been grateful for the financial support during Covid-19 offered through Government schemes, the Pandemic Unemployment Payment (PUP) and Temporary Wage Subsidy Scheme. Without them, there would have been considerable hardship throughout the country. But a tax timebomb is ticking.
Exchequer figures show that those most reliant on the PUP scheme are lower-paid workers, predominantly in the retail and hospitality sectors. What was not immediately apparent to recipients of the payment was the tax implications which will follow.
There has since been some media coverage and publicity around the tax responsibility which falls to these workers and how much they owe will only become apparent in the months to come (see My Money, page 6, for details of tax implications).
Most of the recipients of the €350 a week payment will be in the 20pc tax bracket and how much they owe will be depend on personal circumstances.
They are not liable for USC or PRSI on these payments and will be able to use tax credits to reduce their bill. According to figures from the Department of Social Protection, expenditure on the Pandemic Unemployment Payment up to June 9 is just over €2bn.
Using a conservative estimate on the tax liability to date, recipients will already owe Revenue at least €200m in tax. That is just based on payments so far and is based on the fairly low assumption of a tax liability of 10pc across all recipients, although it could end up at closer to 15pc.
According to Brian Keegan of Chartered Accountants Ireland, there is no doubt that the department will hand over details of recipients to the Revenue Commissions.
"There is a very close tie-up between the Department of Social Protection and Revenue.
"So if Social Protection are paying out money, you can be sure Revenue will be told about it. And there is form for Revenue going after untaxed social welfare payments."
Putting aside 10pc of the payment or €35 a week to cover PUP tax liabilities might not sound like a lot of money to some, but many recipients will have struggled to do so and will absolutely struggle to find hundreds of euro to pay a tax bill if they have not been prudent.
Revenue told me that individuals will be liable for tax on the PUP amount received at the end of the year "when Revenue automatically reviews their tax position".
"Where a PAYE taxpayer owes tax, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing tax credits for a future year or years in order to minimise any hardship," added the spokeswoman.
It sounds like a pragmatic approach, but the money will have to be paid.
Many PUP recipients could find it difficult to secure employment in the coming months, given that retail and hospitality will probably have the most long-term casualties post-lockdown.
What an unfortunate time for some of the hardest hit by the Covid-19 fallout to carry an additional financial burden into the future.
Airline refunds would help summer season take off
An awful lot of people are still waiting for their refunds for cancelled flights either in terms of vouchers or hard cash.
A quick search on social media reveals dozens of unhappy customers of Aer Lingus and Ryanair who have been waiting for their refunds since flight cancellations began in March. It is a cashflow conundrum for airlines which are under tremendous pressure. But the EU has not looked favourably on airline efforts to reverse a requirement to refund passengers of cancelled flights.
Some better-off flyers might not be in a rush to get their money back. But the average family will have spent around €1,000 for a flight to Spain, Italy or Portugal, often a lot more. They may now have to opt for a holiday at home for their annual getaway.
A quick look at four-star hotels in Ireland will show you that just four nights for a family would easily come to €1,000.
Many families will be less flush and less confident about spending big on a holiday now than when they booked their annual sun trip. But a refund from either Ryanair or Aer Lingus could go a long way to funding a staycation be it camping, a home rental or fancy hotel.
Surely the airlines could speed up their refunds to give Irish people a bit more cash for a break at home? This in turn might give our tourism sector a fighting chance of getting through this extraordinary summer.
Sunday Indo Business