Under public pressure, government shut expenses loophole that let ministers claim extra €2,000 in mileage in an election year

AN EXPENSES loophole that allowed cabinet ministers to claim an extra €2,000 a year in tax-free mileage has been closed by the government.

The ‘fresh start’ allowed some ministers, who were appointed to a new job during an election year, to claim a higher rate of mileage twice in a single year.

It meant they could twice claim travel expenses at the higher rate, which applies to the first 4,000 miles they travel in a single year.

However, after controversy over how Health Minister Simon Harris was able to claim the higher rate at both the OPW and the Department of Health last year, the loophole has now been shut.

Documents obtained under FOI show how a memo was prepared for Minister for Public Expenditure Paschal Donohoe to address the anomaly.

It said: “The ‘fresh start’ for Ministers/Ministers of State in respect of aggregate mileage in the year of a general election has been the subject of recent attention in the press.

“Reports focused on the perceived tax benefits available to Ministers/Ministers of State as the only group that retains the benefit of a fresh start.”

The memo explained that the idea had originally applied to TDs and Senators when they were paid mileage to and from their constituency to Leinster House.

It was then extended to ministers to “allow parity” with the other politicians.

However, after a new system of travel and accommodation allowances was introduced for TDs and Senators – the mileage system was abolished, leaving ministers as the only ones who could benefit from the old system.

The memo continued: “Public servants who are transferred or promoted from one travelling post to another carry their aggregate mileage and do not receive a fresh start.

“It is recommended that the ‘fresh start’ provisions be dropped from the next election.”

The system was described as a “relic of the former system” and the memo was signed off by Minister Paschal Donohoe who wrote: “I agree to this.”

The memo also said that not every minister who was entitled to the fresh start had even claimed it because not all knew about it.

“Informal contacts with a number of Departments indicate that Ministers/Ministers of State do not routinely claim a fresh start,” said the memo.

“It appears that most of those appointed or reappointed as Ministers/Ministers of State continue with the aggregated mileage carried forward from previous appointments.”

In a letter sent to all government departments, personnel officers were told the ‘fresh start’ had “largely fallen into disuse”.

The instructions said: “It has been decided that Ministers and Ministers of State should be treated on the same annual basis as public servants generally in respect of mileage. In future … [they] will no longer be able to claim a fresh start to their aggregate mileage in a year where a General Election occurs.”

In a statement, the Department said that the arrangements were a “leftover element” of the old mileage system that had once applied to all politicians.

They said: “[The new system] broke the link with members’ [TDs and Senators] mileage and consequently with the need for a fresh start.

“In the interest of consistency, it was decided that Ministers/Ministers of State would in future operate on the same annual basis as all other staff claiming mileage.”

You can read the background to this story at this blog post here.

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