Minimum wage earners falling back into tax trap
Minimum wage workers are being dragged into a tax trap, it was claimed today.
The Society for the St Vincent de Paul (SVP) warned thousands of people were falling back into the tax net as the minimum wage rose to €7.65 an hour.
The Society said increases in tax credits at the last Budget effectively took 66,000 workers out of the tax loop but as the minimum wage went up another 37,000 were being pulled back in.
Professor John Monaghan, SVP vice president, insisted the lowest paid workers in society had to be protected as matter of urgency.
“The last Budget effectively took just over 66,000 people on the minimum wage out of the tax net as tax credits were increased,” he said.
“However, while the new minimum wage of €7.65 an hour is welcome, the tax credit increase in the last Budget was not sufficient to take account of the planned minimum wage increase now effective and will now push over 37,000 people back into the tax net again.
“The SVP is concerned about this issue as a matter of urgency since we continue to see calls for assistance from people already struggling in low paid jobs.”
Calls for help to the Society’s head office were up by almost 4%, to over 6,200, between January and May this year. Calls were up 14%, to over 1,260, during May compared with the same month last year 2004.
“We believe as we work in the community that a growing level of support is being sought by people in low paid jobs,” Professor Monaghan said.
The Society also called on the Government to increase the number of Labour Inspectors to protect migrant workers and those in the construction industry.
Prof Monaghan warned increasing staff numbers from 21 to 33 was still not enough and he said much more pro-active work was needed in a wide range of sectors.
“Government must provide sufficient resources to ensure that all workers are receiving the new minimum wage and that their employment conditions fulfil the current minimum Irish legal requirements,” he said.
“This is a matter that needs immediate attention so that all workers are treated with the respect and dignity to which they are entitled.”
Prof Monaghan said events at Gama construction where Turkish workers were paid below the minimum wage highlighted the need for much greater vigilance.
The Society also called on the Government to focus on increasing tax credits and to ensure tax plans for Budget 2006 were aimed at helping the lowest paid in society.
