Monday 10 December 2018

Changes to tax breaks which will hit thousands of ordinary workers deferred until 2020

Taoiseach accuses Mary Lou of 'hypocrisy' over $400 lunches as he faces backlash over tax changes

Sinn Féin leader Mary Lou McDonald said shop assistants would lose €120 per year allowed for things like uniforms and equipment
Sinn Féin leader Mary Lou McDonald said shop assistants would lose €120 per year allowed for things like uniforms and equipment

Kevin Doyle & John Downing

Changes to the tax breaks which will hit thousands of ordinary workers have been deferred by a year.

Finance Minister Paschal Donohoe has confirmed that a review of tax relief on expenses will be carried out by the Revenue Commissioners next year.

But he said there will be no attempt to stop the entitlements availed of by at least 80,000 workers until 2020.

“Expenses that are wholly, exclusively and necessarily included for the purposes of work will continue to be claimable under the Tax Consolidation Act. That is not changing,” Mr Donohoe said.

“But what will be happening next year is that the matter will be reviewed. They [Revenue] have informed me that there won’t be any change in terms of how they implement this policy until January 1, 2020.”

This was added to Taoiseach Leo Varadkar’s office which said the review of concessionary flat rate expenses was needed “to ensure that the expenses granted remain justified and appropriate to modern day employments and work practices”.

Earlier, Mr Varadkar faced accusations of “giving tax cuts with one hand while clobbering workers with the other.”

Sinn Féin leader, Mary Lou McDonald, said Mr Varadkar pledged at his party Árd Fheis on Saturday that he would make major tax cuts over the coming five years.  But she said the Revenue Commissioners are in fact moving to cut a special small tax allowance to low-paid workers.

Ms McDonald said people like the 75,000 shop assistants would lose €120 per year allowed for things like uniforms and equipment.  She said the planned change would net just €9m per year for national coffers while the “super-rich” claimed €93m under various allowances last year.

“It’s hardly a massive outlay – but nonetheless the loss of it for low earners will be felt,” the Sinn Féin leader said.  She added that changes to banks’ tax allowances could net €175m while an extra €750m could be taken from multinational companies.

But the Taoiseach hit back and accused Ms McDonald of “hypocrisy.” He said that on November 11, all the Irish party leaders honoured the dead of World War I, and later attended the inauguration of President Michael D Higgins for his second term.

But Mr Varadkar said that on that day Ms McDonald was in New York attending a $400 per-plate fundraising lunch to raise funds for Sinn Féin.

“Do you not see the hypocrisy in that?” the Taoiseach asked.

“You were in New York drinking champagne and having €400 per-plate lunches,” Mr Varadkar later added.

Ms McDonald said she had later attended a World War I commemoration in Sligo on November 14.  She said the planned tax changes would hit the lowest paid workers.

The Taoiseach again accused Sinn Féin of falsely claiming they only take the average industrial wage out of their Dáil salaries. 

He said there would be no change in workers’ tax allowances until 2020 – “if at all” – but he also argued that the Revenue Commissioners were independent in such matters and workers would still be able to claim other expenses.

Tens of thousands more workers are in the firing line for a sudden 'tax grab' that will hit the incomes of some of the lowest paid.

CIÉ workers, teachers, hotel, bar and construction staff may be next to see tax relief on their expenses axed.

The Revenue Commissioners stands accused of an "attack on workers" after it already moved to strip 80,000 people of these annual tax allowances.

Shop assistants, actors and journalists are among those who have already been hit with no warning. Now the Irish Independent has learned that a raft of other sectors is under scrutiny, as the Revenue further reviews the scheme.

Hotel workers, bar staff, construction workers, and rail and bus staff are all in the firing line, it is understood. However, unions claimed that tax officials were reluctant to cut allowances to staff who pay fees to professional bodies, including hospital consultants.

The flat-rate scheme is meant to cover the cost of workers who have to pay for uniforms and tools. It reduces the portion of a worker's income they have to pay tax on. The exact reduction depends on a person's profession - but more than half-a-million PAYE workers currently avail of it.

Ending the allowance will likely wipe out any gains from the recent Budget. There was no warning about the impending change, and it comes despite Fine Gael promising more tax cuts for workers.

Online Editors

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