The government is to pay out €7.5m to contractors, who will be entitled to a tax credit worth up to €1,000 a month, after a High Court judge said the scheme was a “tax scam”.
A judge yesterday upheld the right of the Department of Finance to pay a €2.6m tax credit to contractors and assessors who install public works.
The award is part of a €3.3bn tax relief package to be announced later this year to help the state meet its budget deficit targets.
The department said the decision would not affect the number of people receiving benefits, and the Government will continue to assess contractors for tax credits on a monthly basis.
It said the tax credit was awarded as part of an initiative to increase the number and quality of people employed by the State.
However, a court ruled last year that the government had failed to make any meaningful contribution to the programme, with the assessment of the tax credits being assessed by a single agency.
The case was brought by a group of industrial contractors in a case brought by the National Taxpayers Alliance (NTAA).
The NTAA said the award to contractors was a breach of the right to self-determination and equal treatment, and would undermine the ability of people to benefit from the tax relief programme.
“The award to the contractors has the effect of undermining the right and the right-to-benefit principle of the Tax Credits and Assessment Scheme, which is a statutory provision that provides for equal treatment and the exercise of choice,” the NTAA stated.
The NTTA’s general secretary, Jim O’Neill, said it was “disappointing” that the Government had not provided more information about the tax awards.
“We think that there’s a lot more information that the Department should have provided to Parliament and the public.
It should have given the public more information,” he said.
The government has previously defended the tax breaks, saying they were a necessary and valuable part of the programme to meet the fiscal targets.
It is also being criticised by unions, which say the scheme is “inappropriate and unfair” and has not provided the expected benefits.
The Government is due to publish its annual budget on Monday.