No free lunch on coronavirus cash payments

There’s no such thing as a free lunch, even in the midst of coronavirus misery.

More than a million people have been receiving cash bailouts from the State since the virus shut down the Irish economy. Some lost their jobs altogether and have been receiving €350 a week compared to the standard jobseekers’ benefit of €203 a week. Others are being subsidised through their employer up to €410 a week.

At a time of great financial uncertainty for employees, their families and the businesses in which they work, the payments have been a lifeline even as they worry about the prospect of falling victim to the virus.

The State, conscious of the extraordinary times, moved quickly to ensure people had some financial security. However, such speed inevitably has repercussions and creates its own anomalies.

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People on most welfare payments are liable for income tax but many of those who were forced to apply for the pandemic unemployment payment had never applied for welfare before. They do not know about the tax liability: most will have assumed that welfare payments were not taxed.

For those on the temporary wage subsidy, the position is even more confusing. They are paid through their employer but the subsidy is not taxed at source as they are used to with their normal pay. To further complicate things, any top-up from the employer is taxed at source.

So confusion reigns. And, for most, a shock looms.

By year end, coronavirus will for many simply be a bad memory. Things will have returned to normal in employment terms. But, in tax terms, coronavirus will still lurk because the vast majority of these one million-plus people will owe the Revenue Commissioners money for the cash bailout they got.

Balancing statements carrying the bad news will drop through letter boxes across the State. And the sums will be significant – thousands of euro in many cases.

Revenue is still working out how to deal with it. Bills may be spread over the whole of 2021 and possibly also 2022. Even if they do, it means that many people will have to tighten their belts. But for now there’s just uncertainty . . . and more worry.