Usually, around this time of the year, much of the public and business discourse still centres around the budget and the Finance Bill which, in accordance with the normal rules, was published last Thursday.
If tax was the focus in previous years, it is the benefits provided via the budget announcements outlined within the Finance Bill, which are focusing minds now.
The government supports and benefits provided to help cope with the first lockdown last March were, by and large, timely, effective but also complicated.
Employees benefiting from the Temporary Wage Subsidy Scheme – or TWSS - are right to be concerned about outstanding tax liabilities that flow from it, as the payments did not go through the PAYE system in the normal way.
Similarly, there was confusion over how the Pandemic Unemployment Payment (PUP) was to be taxed, if it was to be taxed at all.
That forlorn hope was misplaced as, in general, almost all social welfare payments are subject to taxation.
Yet, a seemingly throwaway line in the Finance Bill specifying that the PUP is to be taxed as an “emolument” means that for the self-employed, different tax rules than usual will apply.
This highlights the increasingly complex interactions between our tax system and our social welfare systems.
Calls for a simpler system of welfare which is more tightly integrated with the tax system are not new.
One suggestion is for a universal basic income, whereby all citizens of a country would receive a basic stipend, which is independent of eligibility or means criteria.
This universal basic income would replace all of the current social welfare supports and benefits and be taxed.
For those on a wage, it would be like a top-up benefit.
For the unwaged or for those unable to work, it would provide a safety net.
The PUP is, in very many respects, an example of what a universal basic income might look like.
New figures from the Parliamentary Budget Office suggest that social protection already accounts for almost 30% of Government expenditure.
A universal basic income would increase expenditure further leading to higher taxes.
Over the last decade successive Irish governments have found it very difficult to increase the tax burden as the repeated deferrals of local property tax valuations and water charges bear out.
Tax increases could be contemplated if it could be shown that the universal basic income would serve society as well as its advocates expect it should.
A study conducted by the Finnish authorities may shed some light on the issue.
In their 2017/18 study, the Finns paid 2,000 unemployed persons a basic income regardless of any other income they may have had or whether they were actively looking for work.
A similar-sized group receiving standard unemployment benefits was selected for comparison.
It did not deter recipients from seeking employment to further improve their lot.
However, less than one in four of those involved in the trials responded to follow-up surveys, so the findings are open to challenge.
The new version of the pandemic unemployment payment here allows self-employed people to earn up to €480 a month without disqualification from the PUP entitlement.
This pandemic is a phenomenon beyond our comprehension a year ago.
Perhaps part of its legacy could be compelling evidence for a universal basic income – again something beyond our comprehension a year ago?
- Dr Brian Keegan is director of public policy at Chartered Accountants Ireland.