Taxing Times In Dáil

As opposition parties united in their objections to the decision to backdate the new income levy rates, the Department of Finance is expected to issue 'clarification' on the issue of newly introduced income levy rates.

Criticism has been growing over plans to apply the taxes retrospectively after the news emerged yesterday that the Government is to backdate the new higher income levy rates for some taxpayers.

They said initially that new rates announced in last week's supplementary Budget are to be backdated to the start of 2009, despite earlier indications that the new rates would come into force on May 1st.

The move will hit anyone who has received a lump sum payment in the first four months of 2009 or those who have were given bonuses.

The 21,000 people made redundant this year will also be hit by the plan.

While statutory redundancy payments are not subject to the income levy many of those taking voluntary redundancy pay the levy on part of their lump sum.

They will now be paying more than the 1% levy they initially assumed to be their maximum exposure under the levy.

The Dáil has today heard Fine Gael calling on Minister for Finance Brian Lenihan to close the "scandalous" loophole.

"Thousands of people who have been made redundant by the end of April are likely to have the new income levy backdated on a portion of their redundancy payments, even though the higher levy only kicks in on May 1st", said Deputy Leader and Finance Spokesman Richard Bruton.

Labour Party Finance Spokeswoman Joan Burton said any attempt by the Government to backdate the higher rates of income levy to the beginning of the year would be "morally unjust and legally dubious."

The Irish Times has this morning reported that the Department of Finance "statement on the issue" would be published later today.

See: Economic Recovery Is Irish Budget's Aim


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