Employees could face ‘nasty shock’ in January pay packets, Dáil hears

Tens of thousands of workers could face a “nasty shock” in their pay packets from January following a review by the Revenue Commissioners of flat-rate expenses, the result of which is expected by the end of the year.

Fianna Fáil finance spokesman Michael McGrath said low and middle-income workers could face the biggest shock from the examination of the system that involves over 600,000 workers in different sectors and which has been ongoing for the past 18 months.

The Cork South-Central TD said according to the Revenue website the outcome of any changes will come into effect in January next year and it was a “really significant issue for a lot of workers”.

He said it involved expenses of over €160 million annually with €48 million in tax saved. Citing a number of examples of sectors affected, he said miners in Tara Mines had an allowance of €1,312 resulting in a tax saving of over €500 while many nurses had an allowance of €733 with a tax saving of close to €300 a year.

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Fianna Fáil TD Shane Cassells in whose Meath West constituency Tara Mines is located, said in previous review miners enjoyed an increase in their allowance but he said there is now a "real fear that the allowance could be removed entirely". He said miners worked 900 metres underground in the "belly of the mine" and it was a harsh experience.

Mr McGrath said “we are getting close to the deadline and we don’t know where this is going”.

During finance questions in the Dáil he said “there could be a nasty shock in January for tens of thousands of workers if not more when they see their pay slip”.

And he said before any changes are made “we should be made aware of them and be given an opportunity to debate them in the House and to discuss with the Revenue in the finance committee the natures and scope of these changes and to see if any change is possible”.

Minister for Finance Paschal Donohoe said the administration of the tax code was a matter for the Revenue but he expected they would implement the outcome in their "customary proportionate and fair manner".

Mr Donohoe said the scheme had developed over the past 40 to 50 years and currently incorporates 53 employment categories covering 133 different allowances.

He said he was “well aware of the number of citizens affected” and the likely impact on their income.

The Minister wrote to Revenue this week asking them to provide details of what was involved so that he would “have a clearer understanding of the scale of change that may ensue”.

He has sought details of the number of employees involved, the different categories involved and the cost to Revenue as well as the benefit to each employee group and would provide the information to TDs as soon as possible.

Mr Donohoe stressed however that given the sensitivity of the issue “this is solely a matter for the Revenue commissioners”.