Jackie Cahill (Tipperary, Fianna Fail)
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The temporary Covid-19 wage subsidy scheme, TWSS, was announced on 24 March 2020 and ran until 31 August 2020. It replaced the Revenue employer Covid-19 refund scheme. It allowed employers to continue to pay their employees during Covid-19. It aimed to keep employees registered with their employers so that they could get back to work quickly after the pandemic. The employment wage subsidy scheme, EWSS, which replaced the TWSS, came to an end in May 2022 after two years. The EWSS was the biggest and most important of the wage schemes that were introduced at the height of the pandemic. These schemes helped prevent mass unemployment in our economy during the Covid-19 lockdowns. Along with schemes such as the pandemic unemployment payment, they ensured State injection of investment in the economy so that we did not enter into deep recession. The measures introduced by the Government during Covid-19 saved thousands of jobs, protected livelihoods and ensured people could continue to pay their bills when the economy was effectively shut down at times to protect lives. However, those who continued to work during lockdowns such as front-line and essential workers and who received TWSS payments are now facing bills from the Revenue Commissioners. I have been contacted by constituents in County Tipperary who have been impacted by this. They feel it is wrong that they are now facing bills from Revenue particularly in the lead-up to Christmas after their genuine and honest efforts to continue working when the country was in various lockdowns. These people, for the most part, continued to work the same hours for the same pay. They were no better off financially by doing this even if they were paid normally. By normally, I mean that they were paid without their employers having claimed the TWSS, yet they now face this tax burden.

I ask the Minister of State to not burden these people who continued to work and to keep essential services running in this country at considerable risk to their own health with these additional tax bills now. Their efforts to work at a time there was considerable risk in doing so should be recognised by not retrospectively face these taxes. They worked the same hours for the same pay and now face a bill as a result. I ask that these tax bills are not placed on the people who worked so hard during the Covid-19 pandemic to keep our country open.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Deputy for raising this matter. I might take this opportunity to provide a recap on the wage subsidy schemes that were a central pillar of the Government's response to the Covid-19 pandemic. The issue raised by the Deputy has been raised with me and I know a number of people are in similar situations.

Covid-19 had a sudden and profound impact on the economy with the introduction of public health restrictions across all sectors of the economy, except for those businesses classified as essential services. In response, the TWSS was introduced in March 2020, with the objective of supporting viable firms and maintaining the relationship between employers and their employees. At the outset, it was expected that the TWSS would be in place for a period of 12 weeks. However, given the novel circumstances and the evolution of the situation, it was soon recognised that the measure should remain in place until August 2020. The TWSS was replaced by the EWSS with effect from 1 September 2020.

The EWSS continued to operate as an economy-wide support until the scheme ended on 31 May this year.

The total level of support provided by the wage subsidy schemes was unprecedented at around €10.8 billion, with €2.9 billion in respect of the TWSS and €7.9 billion in respect of the EWSS. Over 66,500 employers were supported through the TWSS, assisting 664,000 employees. The EWSS supported 51,800 employers in respect of almost 746,000 employees.

On the specific issue raised by the Deputy regarding the taxation of EWSS, such payments were taxed in real time in the hands of employees in the same way as normal pay is taxed. EWSS payments were made directly to employers as a per-head subsidy. In turn, they paid their employees. Under the EWSS, as the payments were taxed as they were paid, no undercharges of tax should arise for an employee. However, the position as regards the TWSS was different. Payments made under the TWSS were regarded as income supports and share the characteristics of income. Other income earners in receipt of comparable "normal wages" are taxable on those wages. In the interest of equity, therefore, payments under the TWSS were subject to income tax and the universal social charge, USC.

While income tax and USC on most income are deducted in real time as and when the person is paid, the TWSS payments were not taxed in real time and were instead liable to income tax and USC at the end of 2020. Therefore, tax was not collected while the scheme was in operation to maximise the amount of financial support provided to recipients at a time when it was considered most needed. Instead, liability to tax was determined by way of review at the end of the year.

The tax treatment of TWSS payments was set out in the legislation underpinning the scheme, the Emergency Measures in the Public Interest (Covid-19) Act 2020. The Government was consistent as regards the tax liability of TWSS payments from the outset. Indeed, I have been advised by the Revenue Commissioners that it clarified the tax treatment of the TWSS at employee level in the guidance material on the TWSS that it published on its website since the commencement of the scheme.

The Revenue Commissioners made a preliminary end-of-year statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The statement, which is based on information available on Revenue records, includes information relating to an employee's income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. When I have an opportunity to respond to the Deputy's supplementary remarks I will try to provide further information.

Jackie Cahill (Tipperary, Fianna Fail)
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While the Minister of State was speaking, I read to the bottom of his statement. It is an extremely comprehensive answer and outlines in detail the Revenue Commissioners' treatment of the TWSS. The reality is that people who stayed working during the Covid pandemic and provided essential services for us are now paying a larger proportion of their wages in tax, making up for what happened during the pandemic. While the Minister of State's written statement is extremely clear, it states that "the Government has been clear from the outset that TWSS payments are taxable and in the interests of equity for all taxpayers, there are no plans to change this approach".

There is an affected section of workers who provided essential services. We rightly made a payment to health workers and other front-line workers, whether they were putting bread on the shelves in the supermarkets or doing other services. Irrespective of the service, they continued to work during the pandemic. Now, when they examine their pay packets, they find the tax credits are reduced and the amount of tax has increased.

The Minister of State's explanation is very clear, comprehensive and precise but I ask him to talk to the Revenue Commissioners to determine whether they will recognise the unprecedented circumstances in which workers worked. They were out and about providing essential services and then going home to their families. They now feel an increased tax burden at a time when the cost of living has increased due to the war in Ukraine.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I understand what the Deputy is saying. As he has read in the statement circulated, upon reviewing the preliminary end-of-year statement through myAccount, which is Revenue's secure online facility for individual taxpayer services, employees had an opportunity to complete their income tax returns for 2020, declaring any additional income and claiming any additional tax credits due – for example, qualifying health expenses – to arrive at their final liability. When a liability has been finalised, individuals can opt to fully or partially pay any income tax and USC liability by way of the payments or repayments facility through the Revenue Commissioners in the normal way. Where individuals did not opt to fully or partially pay, the Revenue Commissioners collect the liability by reducing their tax credits over four years interest free. The reduction of tax credits started at the beginning of January 2022. Essentially, the legislation is underpinned by legislation passed in the Oireachtas some time ago. That legislation has not changed and there are no plans to change it or go back to the Revenue Commissioners to reinterpret it.

A number of individuals across the country are in the circumstances described. The legislation provides that any underpayment of tax can be collected over a four-year period. Some people have opted to pay up-front to clear the decks, but the option to spread payments over four years is as far as the legislation permits us to go at this time to ease the cash-flow burden on those affected. There are no plans to change the legislation at this time.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I thank the Minister of State for being so frank.