Miscalculation by Finance ‘denies funds to working poor’

MISCALCULATIONS by the Department of Finance has left the working poor out of pocket when they could have received the benefits of refunded tax credits, a non-profit organisation claims.

Social Justice Ireland has said the department over-estimated by 95% the cost of a proposal to make tax credits refundable to low-income households.

The director of Social Justice Ireland, Fr Seán Healy, said making tax credits refundable to the working poor would benefit 113,000 low-income individuals, or 240,000 people when their families are included.

He said the real cost of such a move would be just 5% of the €3 billion the Department of Finance estimated it would cost, standing instead at just €140m.

The argument by Social Justice Ireland is based on research carried out by economists in Trinity College Dublin and will be outlined before the Oireachtas Committee on Social and Family Affairs today.

Fr Healy will argue that when an individual’s income is insufficient to use up all of his or her tax credits, the remaining credit could be paid to the person through a cash transfer, and that this would help many families who lose out as they do not benefit from increased tax credits after any budget.

He said any scheme to refund tax credits should operate under a set of proposals such as only the unused portion of the personal and PAYE tax credit would be refunded and that recipients must be at least 23 years of age and have accrued a minimum of 40 PRSI weeks and earned an annual income of not more than €15,600.

Fr Healy said of the almost 113,000 households that would come under such a scheme, most refunds would amount to between €800 and €1,000 a year, or between €15 and €19 a week.

The Department of Finance made its assertion on the €3bn in February last year. Social Justice Ireland first made such a proposal in 2001 and Fr Healy said its figures had been peer reviewed.

“It is a group, the working poor, you want to keep in employment,” he said. “Such a reform would mark a significant step in the direction of building a fairer taxation system and represent a fairer way for Irish society to allocate its resources.”

The research was carried out by Micheal Collins, of the Government’s own Commission on Taxation and Robert Ryan of TCD.