A “REDUNDANCY rip-off” has been imposed on the unemployed as swingeing rises in income levies announced in the budget are effectively backdated to the start of the year, Fine Gael warned last night.
The outrage came as the Government was thrown onto the back foot over claims it had tried to fool voters by announcing long-service payments for TDs were to be abolished.
While PAYE wages will not be affected before May 1, lump sums, including add-ons to statutory redundancy paid in the first four months of the year will be liable to a higher levy than before the budget as the Department of Finance moves to bring in an average percentage level for the year. While statutory redundancy payments are exempt from the income levy, many of those taking voluntary redundancy will pay the tax on part of their lump sum.
Fine Gael finance spokes- man Richard Bruton described the move as “scandalous”.
“Thousands of people who have been made redundant by the end of April are likely to have the new income levy backdated on a portion of their redundancy payments, even though the higher levy only kicks in on May 1.
“It’s bad enough that thousands of people are losing their jobs every month. But for the Government to go chasing after their hard-earned redundancy payments by applying new taxes retrospectively is scandalous,” he said.
Labour finance spokeswoman Joan Burton said any attempt by the Government to backdate the higher rates of income levy to the beginning of the year would be “morally unjust and legally dubious”.
“While most PAYE workers who are paid on a weekly or monthly basis will not be hit, there are many workers who will legitimately have received lump sum payment in the first four months of this year.
“If the Minister for Finance was genuinely worried that some wealthy people front-loaded payments ahead of the budget, then it should have been possible to include an anti-avoidance provision in the Finance Bill that would prevent this without hitting taxpayers generally,” she said.
Ms Burton also said that she would give up her annual long-service payment of e6,400 a year, paid for being a TD for more than seven years.
The decision followed controversy after Finance Minister Brian Lenihan was accused of making it appear that the payment would be abolished for the 66 TDs receiving it, while in reality, he was only stopping it being paid to future recipients.
Independent TD Jackie Healy-Rae refused to give up the payment.
“If they owe me money I’ll take it and no more,” he said.
A spokesperson for Mr Lenihan said the average income levy would only hit redundancy payments for a small number of people and it may be amended when the Finance Bill goes before the Dáil.
Meanwhile, Fianna Fáil said former Taoiseach Bertie Ahern was “looking into” reviewing his monthly travel allowance of e230.
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