I welcome the Minister, Deputy Dara Calleary, to the House. I thank him for coming here today. I call Senator Keogan.

I thank the Leas-Chathaoirleach. It is great to see the Minister here. I wish to raise a matter that, while it may appear technical on the surface, has very real consequences for ordinary people.

I call on the Minister to make a statement on the need to move towards a more universal system where all taxable Department of Social Protection payments are automatically reported to the Revenue Commissioners. At present, our system is inconsistent. Many Department of Social Protection payments are already reported to Revenue in real time. The State pension, jobseeker's benefit, maternity benefit, and one-parent family payment are integrated into the PAYE system, allowing tax to be collected during the year in a relatively smooth and predictable way. However, that is not the full picture. There remains a category of taxable Department of Social Protection payments, often older and more specialised schemes, where this integration has not taken place. The following payments are not automatically reported: the bereaved partner's pension, the blind pension, the death benefit, the deserted wife's allowance, the deserted wife's benefit, and the disablement payment. Instead, we rely on individual receipts to declare them manually.

The consequences of this are very real. Imagine a person who has worked all his or her life and is now in receipt of a modest pension alongside a smaller welfare payment, or think of someone's grandmother who receives one of these legacy supports. These people are not tax experts. They reasonably assume that if the State is paying them an income, the tax due is being handled, but then, at the end of the year, without warning, they receive a tax bill. It is not because they did anything wrong but because the system relied on them to know something that would not be obvious to most people, namely, that their particular payments were not reported automatically. That creates stress and confusion. It undermines confidence in the system. It is especially frustrating because it is entirely avoidable.

There is a further dimension to this. Since many of these payments are older legacy schemes, they are, by definition, more likely to affect older and more vulnerable citizens. They are the people least equipped to navigate a complex tax system and they are the ones most exposed to its gaps, which brings me to the central point. This is the modern digital age. We have a PAYE system that operates in real time across the vast majority of incomes. Public bodies share data seamlessly. The State already has the mechanism in place, as shown by the many Department of Social Protection payments that are already integrated. Why are we not joining the dots? I have to say "Well done" to the Government for adding the carer's benefit and allowance to the automatic reporting system, but it is a bit shocking that this was only done this year. That should not be the case.

If the State makes a payment and it is taxable, then it should follow, as a basic principle, that it is automatically reported to the Revenue. That should be the default systematic assumption, not something that depends on the type of scheme or when it was introduced. Instead, what we have is a patchwork system. Payments have been added here and there over time, often in response to issues as they arose, rather than designed from the outset as part of a coherent whole.

To be fair, let us focus on the positives. Ireland overall has very good tax systems compared with many other countries. It is efficient, relatively simple, and operates in real time. The Revenue Commissioners are probably the best arm of the State. It is precisely because of that strength that we should be aiming higher. Where gaps exist, particularly gaps that affect ordinary people in their day-to-day lives, we should be closing them, and this is one of those gaps. Accordingly, I am asking the Minister to set out whether the Government intends to move to a universal model of automatic reporting on all taxable Department of Social Protection payments, and if not, to explain why a reform that is so practical, achievable and necessary has not yet been implemented, or if it will maybe make all these payments tax-exempt.

Gabhaim buíochas leis an Seanadóir Keogan as ucht an t-ábhar seo a ardú. As the Senator has intimated, it is important to note that individuals are responsible for reporting their income to the Revenue Commissioners. For any Department of Social Protection payment that is taxable, the decision letters clearly state, when the payment is awarded, whether this information is shared with Revenue or whether the customer needs to notify Revenue themselves. It is a general principle of taxation that, in the absence of a specific exemption, all income, from whatever source, is income for tax purposes and this includes amounts paid to an individual by the Department of Social Protection. Responsibility for taxation policy, including the tax treatment of social welfare payments, rests with the Minister for Finance and is administered by the Revenue Commissioners. All payments from the Department of Social Protection are considered taxable unless specifically exempted from income tax.

The legislation governing the taxation of social welfare payments is in sections 19 and 126 of the Taxes Consolidation Act 1997, which was amended in 2018 to clarify which payments are exempt from the charge to tax. It should be noted that these payments are subject to income tax but exempt from the universal social charge and PRSI.

In order that Revenue can ensure that the right amount of income tax is collected in a timely manner, my Department reports details of these taxable payments to it on an ongoing basis. There are currently 20 scheme types on the taxable payments report, with nearly 1 million customers, including those in receipt of State contributory and non-contributory pension, illness benefit and invalidity pension payments.

There are a few very small schemes, with only approximately 18,000 customers in total, that are not yet included in the report. My Department exchanges the taxable payments report with the Revenue Commissioners each week, giving details of the customers. Such data exchanges between the Department and Revenue are permitted under the Social Welfare Consolidation Act 2005.

Where a person also has an additional source of employment, occupation or pension income, the mechanism used to collect tax due involves reducing the person’s annual tax credits and rate band by the annual amount of their social welfare income. This ensures that the Department of Social Protection payment is paid gross to the recipient, while the salary or pension paid by the employer would have any tax due on both the social welfare payment and the employment deducted from it.

Senior officials in my Department engage regularly with Revenue by means of a joint high-level group that meets to discuss matters of mutual interest. The group is currently in discussions about including those last few taxable social welfare schemes on the taxable payments report.

I endorse the Senator’s remarks on the Revenue Commissioners and their work. I thank her for raising this issue. I will continue to keep in touch with her on it as we progress towards sharing the information.

I thank the Minister for engaging with me on this issue. He stated that only 18,000 are affected, but informing people is not the same as designing a system that works for them. The system should not depend on whether a citizen happens to understand the technical distinction between reported and non-reported payments. Where the State can take care of this issue, it should. It is as simple as that.

These payments are complex, and the complexity is being pushed onto the citizen, which is neither acceptable nor efficient. A burden of complex administration is being taken from the Civil Service, which is best able to handle it, and put onto the citizen, who is less equipped to understand the matter. That will only result in more time and resources being spent on correcting errors. We all know that when we owe the Revenue Commissioners, be it in life or in death, the payment is taken. Maybe the Minister could take my remarks on board and maybe we could have a complete tax exemption that includes carers.

Tax exemptions are a matter for the Minister for Finance, but I assure the Senator that we want to ensure our payments, which are a lifeline to so many, do not lead to a build-up of tax liability. I absolutely want to avoid a situation of surprise or anxiety. I am totally with the Senator on that. That is why we share the data in relation to taxable social welfare payments. We share it on a weekly basis to allow the tax to be deducted throughout the year rather than at the end. I have gone through the method. I assure the Senator that the decision letters that are issued to customers state clearly whether they need to notify Revenue or whether we include the data in the taxable payments report.

There are about 18,000 customers on six schemes that are not included in the weekly taxable payments report. We are working towards including them. I assure the Senator, and I want to emphasise, that I do not want a situation where customers of the Department of Social Protection end up with a build-up of tax liabilities. We are working towards addressing this.