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Criticism mounts that PUP tax discourages people from returning to work

DUBLIN: The PUP tax introduced by the government has been criticised as making people lazy. Job experts say the PUP tax is discouraging people from returning to work. They also point out that this would deter people with low incomes from returning to work.

The issue came up for discussion among PUP beneficiaries after news broke that people returning to work after the lockdown would have to pay taxes from this year. If people do not come to work, they will not have to pay taxes. Experts are of the opinion that, in this case, people receiving PUP might think that it is better not to go to work.

Chartered accountants say that if a worker enters the job in June with a salary of €750 a week, he will incur an additional tax liability of €70 a week on the PUP tax received earlier this year. But for people who remain in PUP payment throughout the year, they do not have to pay tax this year. For this reason, chartered accountants say that people cannot be blamed if they decide not to go to work this year.

As soon as people return to work in 2021, there will be measures to reduce tax credits. The tax credit is the amount that can be earned before paying taxes.

Workers can claim a total of €3,300 in tax credit a year. If couples, then they can share €1650 each. The income tax levied on PUPs will be deducted from these tax credits this year. If this is not enough, the PUP will also take the tax credit of the beneficiary’s partner. Chartered accountants point out that this could lead to credit cuts and the adjustment of future tax bands.

According to media reports, Revenue has revealed that people will have to pay income tax on PUP money this year since they return to work. The Finance Minister himself gave a vague confirmation of this. People will have the option to pay their taxes within four years from next year. However, all the beneficiaries are worried and disappointed as they know that the PUP tax will be added to the tax credits. The loss of the tax credit of the PUP beneficiary’s partner also makes the people more inactive.

Seán Sherlock, a Labour spokesperson on social protection, said the tax bill for people at this high point in the pandemic should be avoided. “By hitting the tax credits of people who have lost their jobs, it could well lead to people being discouraged from going back to work. We need to see action from the Government on this,” he said.

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