asked the Minister for Finance the estimated total number of people paying income tax through the PAYE system in (a) the Twenty-six Counties, (b) the greater Dublin area, (c) Dublin Corporation area and (d) Dublin County Council area.
Ceisteanna—Questions. Oral Answers. - PAYE System.
61.
The number of persons in the State effectively liable to income tax for 1970-71 whose emoluments were subject to deduction of tax under PAYE is estimated at about 500,000. Statistics are not compiled in such a manner as would enable the remainder of the information requested by the Deputy to be given.
Is there any way in which these figures or an approximate estimate could be got?
The Deputy raised this matter on the 27th October, 1970, and the Minister said that if it was possible to get the information he would communicate with the Deputy. As a result of that he sent a memorandum to the Revenue Commissioners. They said that it was not possible to compile this information without going through each individual tax claim. It was decided that it was not worth the expense that would be involved to get this information for the Deputy.
62.
asked the Minister for Finance the total amount collected through PAYE for each year since 1966; and the total amount of income tax collected for each of those years.
As the reply is in the form of a tabular statement I propose, with your permission, a Cheann Comhairle, to have it circulated with the Official Report.
The information requested is as follows:
|
Year |
Net amount of income tax collected under PAYE |
Total amount of income tax collected |
|
£ |
£ |
|
|
1966-67 |
26,967,287 |
60,751,857 |
|
1967-68 |
32,107,882 |
66,868,371 |
|
1968-69 |
38,977,763 |
77,308,869 |
|
1969-70 |
48,744,561 |
89,698,532 |
|
1970-71 |
63,255,563 |
112,837,768 |
63.
andMr. Malone asked the Minister for Finance if he is aware of the hardship imposed on many members of the regular Defence Forces by withholding at this time of the year an inordinate amount of their pay for income tax; and if he will have the PAYE system applied to them.
64.
asked the Minister for Finance whether he is aware of the severe hardship caused to Army privates and NCOs by the method of collecting a year's income tax from them in large instalments over a restricted number of months; and whether he will remove this hardship by introducing a PAYE system for Army personnel.
65.
asked the Minister for Finance whether he is aware of the severe hardship caused to foresters by the method of collecting a year's income tax from them in large instalments over a restricted number of months; and whether he will remove this hardship by introducing a PAYE system for foresters.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 63, 64 and 65 together, as they raise the same point.
On the introduction of the PAYE system in 1960, members of the Defence Forces and foresters employed in the Forestry Division of the Department of Lands were, in common with State employees generally, excluded from the system as they already had tax deduction machinery available to them. This machinery provides for the making of provisional deductions as from the beginning of the tax year and is, generally speaking, working satisfactorily. These provisional deductions are adjusted later in the year when formal assessments are made.
At the commencement of each tax year the attention of serving members of the Defence Forces and forestry workers is drawn to the availability of the provisional deduction scheme. The majority of them elect to participate in the scheme. In the case of a person who does not avail of the deduction scheme from the commencement of the tax year, deduction of tax cannot begin until later in the year and this necessarily results in heavier deductions spread over a shorter period.
The existing arrangements are probably more favourable in the vast majority of cases than if a PAYE system operated. I might add that it has now been arranged, following meetings between unions representing State industrial employees and representatives of Government Departments, that the Revenue Commissioners will issue a ready reckoner which will serve as a broad guide to an individual employee's tax liability and that the individual will be furnished early in the new tax year with the figure of his total earnings in the previous year. He can then arrange early in each year for appropriate deductions to be made from his pay. Discussions are continuing with the unions with a view to effecting any other feasible improvements in the method of collecting income tax in these cases.
Consideration is, I understand, also being given by the Department of Defence to the question of improving the method of collecting income tax from the men of the Defence Forces.
Is the Parliamentary Secretary aware that many thousands of Army personnel, forestry workers, and other State personnel are at present having their wages slashed by half, by amounts ranging from £5 to £10 to £16 per week, and that these deductions for income tax purposes will continue until next April? Many thousands of ordinary working-class people have a take-home pay which is inadequate to provide for a subsistence level of existence? In the circumstances, would he not agree that as administered, in the absence of the PAYE system, the present arrangement is callous and vicious and needs to be amended immediately? Is there any reason why those people should not be included under the PAYE system and thereby have these amounts extracted in a much less painless fashion?
I agree with the suggestion made in the reply that at last something will be done with regard to this anomaly. I am referring to payments to members of the Defence Forces and I agree with Deputy Treacy that large amounts have been stopped in the recent past. In view of the fact that there is an obvious change of heart in the Department of Finance regarding the withholding of inordinate sums from noncommissioned personnel of the Irish Army will he now, in this Christmas spirit, say that he will not stop any more from them before Christmas?
How does the Parliamentary Secretary expect a private soldier, with one child, paying £5 a week for his house and getting a total of £19, to give £6 per week to the Revenue Commissioners? Is this fair or reasonable? This is the present position?
There is a provisional deduction scheme available to the men. Some of those who do not avail of that scheme find themselves in difficulty. With regard to the men of the Defence Forces, I understand from the Department of Defence that there are proposals to introduce, with effect from 1st May, 1972, a revised system of provisional tax deductions based on the individual's previous year's earnings and tax free allowances. It is also understood that consideration will be given to the feasibility of introducing other improvements similar to those proposed in respect of the civilian employees in the Defence Forces.
I should like to mention, also, that there would be some disadvantages in some cases to people being put on PAYE as distinct from this provisional scheme. The principal disadvantage would be that each employee would be charged tax on the basis of his current earnings instead of those of the previous year. With the continuing trend towards higher wages, this would mean for most, if not all, of the employees concerned an immediate increase in their tax liability. I also understand that in most cases the Revenue Commissioners will be agreeable to carry tax liability from one quarter into the next quarter so that the deductions can be taken over a longer period and will, therefore, be smaller. It is a matter for the individual to apply to the Revenue Commissioners in these cases.
Is the Parliamentary Secretary aware that I have here a cheque for the amount of £41.60 and from this cheque £37.31 is deducted for income tax and the unfortunate man is left with £4.30. This is the system which I decry in this House. Is there any reason why PAYE cannot be applied to these people and exonerate them from this kind of vicious extraction? I can give the number of the cheque.
I hope that the discussion we have had today will be helpful to the individuals the Deputy represents because it is for the individual to avail of the schemes that are there. If he avails of these schemes, he will not find himself with this problem next year, please God.
Question No. 66.
May I ask a topical question relating to Army personnel? Could the Parliamentary Secretary now assure us that between now and the New Year there will be no further deductions made for income tax and that it will be properly adjusted in the New Year?
I shall bring this to the attention of the Minister and no doubt he will see the Revenue Commissioners about it. I understand from the inquiries made by the Minister that the Revenue Commissioners are prepared to extend the tax liability period.
It is the time of year I am worried about.
I am calling Question No. 66. This is turning into a debate.
Why has it not been found possible to apply PAYE? Have the Minister and the Parliamentary Secretary lost all hope of applying it to the categories referred to?
As I have explained, there could be disadvantages. Section 4 of the Finance Act, 1959, now section 125 of the Income Tax Act, 1967, excluded from the scope of PAYE emoluments paid to persons remunerated by the State. These Acts were passed by this House and that is the situation as the law stands at the moment.
Surely, we can change that?
The Minister, no doubt, will consider these remarks in the context of the next Budget.