About €267.8 million was paid by the State last year in pandemic wage supports to businesses that may also have paid dividends, according to an analysis by the Revenue Commissioners.
Niall Cody, the chairman of Revenue, revealed the figure in a note to the Public Accounts Committee (PAC) in February after it asked him for details of businesses that made payments to shareholders while they were receiving taxpayer support.
Mr Cody said Revenue did not have enough “readily available and analysable data” on subsidised companies that also paid dividends. He said Revenue had, however, conducted a “short exercise” analysing payments to companies that also filed returns for dividend withholding tax (DWT).
Revenue found that 641 companies that claimed the €267.8 million in employment wage subsidy scheme (EWSS) also filed for DWT, advising tax authorities of “some form of distribution” to shareholders. However, DWT returns do not say whether the dividend was paid in cash or shares, and so it “was not possible” to say how many of them had made payments to shareholders, Mr Cody said.
‘Business decision’
John Hogan, the secretary general of the Department of Finance, also wrote to the PAC in February about the issue, following weeks of political controversy after The Irish Times revealed several prominent businesses had paid cash to shareholders while on State support.
Mr Hogan said it was important to note the wage subsidy schemes were “introduced and developed in extraordinary times” and were emergency measures whose longevity was not foreseen. He said the laws underpinning wage support schemes made no mention of the payment of dividends and such payments were “primarily a business decision”.
In the normal course of events, if a company made a profit, shareholders would be entitled to seek a dividend,” he wrote. Mr Hogan said it was “unclear” if a dividend ban on subsidised companies would be effective because they could just delay dividends to a later date or stay out of wage subsidy schemes, which might impact on staff.
‘Deaf ears’
The PAC correspondence was recently released to Labour TD Ged Nash, the party's spokesperson on finance. He has called for a full PAC investigation of the management of the pandemic wage subsidy schemes, which cost taxpayers over €10 billion.
Mr Nash, who says the State made a mistake by not linking wage subsidies to a dividend ban, has proposed an amendment to the Covid finance Bill currently making its way through the Dáil, calling on the Minister for Finance, Paschal Donohoe, to commission a report on the management of the schemes.
Mr Nash said warnings about the danger of subsidised companies paying cash to shareholders had “fallen on deaf ears” at the Department of Finance and he queried why Ireland had not introduced a dividend ban while some other EU countries had done so.
“Serious lessons need to be learned from the management of this process,” he said. “Some companies took subsidies and then paid dividends, while some workers who received the subsidies are pursued for tax bills on it. The contrast in treatment is there for all to see.”
Companies that paid dividends while on State subsidies include Newbridge Silverware, Krispy Kreme and the O'Flaherty motor group.
