Michael Noonan (Limerick City, Fine Gael)
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The position is, as I have stated on many occasions in the House, that since the 1st of July 2013, Maternity Benefit is treated as taxable income. The underpinning legislation for this measure was contained in the Finance Act 2013, which was passed by the Oireachtas and signed in to law on 27 March 2013. It is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments are reckonable as income for tax purposes. These include long-term payments such as Disablement Benefit, the State Pension, Widows, Invalidity and Blind Pensions, Carers Allowance and the One Parent Family Payment, as well as short term benefits such as Job Seekers Benefit. Treating these payments as income for tax purposes is essentially a matter of equity.

I am fully aware that some employers do not pay a top up payment to their employees whilst on maternity leave. However, in such circumstances many mothers will not be subject to income tax on their maternity benefit payments as their personal credits will ensure that no tax arises on the social welfare income itself. Of course, the extent, if any, to which taxation actually arises in a given case, depends on the total level of income that the individual or couple concerned has in the relevant tax year or years.

I would point out that maternity benefit payments will remain exempt from Universal Social Charge and PRSI.

Given the current budgetary constraints, I have no plans to provide an exemption along the lines suggested. As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones, but I must be mindful of the public finances and the many demands on the Exchequer.