Why would government ministers be allowed to claim higher rate of mileage twice in a single year?

HEALTH Minister Simon Harris will be able to claim an extra €2,000 in tax-free mileage because of a bizarre loophole in expenses rules for ministers.

Mr Harris is being allowed to claim twice at a higher rate of mileage in a single calendar year because of a government circular from almost 25 years ago.

The “fresh start” loophole lets politicians who switch from being a Junior Minister to a Senior Minister during an election year be treated effectively as if they are new to the job.

Apparently, Simon Harris is the only one in the current government who falls into this unusual category.

The financial benefit is quite significant and means that Mr Harris will twice be able to claim for more than 6,000 kilometres at a rate of 59 cents per kilometre.

While serving at the Office of Public Works, Minister Harris claimed for 8,196 kilometres which was worth €4,302.94 in total to him.

Of that claim, 6,437 kilometres was paid at the higher rate of 59c/km and the remainder was paid at a much lower rate of 28c/km. You can see the rates on the Revenue website here.

When Mr Harris moved to the Department of Health, it would normally be expected that his mileage claims from then on would continue to be paid at the lower rate.

This is what would happen to civil servants who transfer between state bodies or departments.

However, because of a circular issued in 1992, Mr Harris was given a “fresh start” for the purposes of his mileage and the clock was effectively reset to zero.

The issue probably did not crop up in recent years because until 2011, senior Ministers were provided with a state car and did not have to make mileage claims.

However, the Fine Gael and Labour coalition abolished that system for all but the Taoiseach, Tánaiste and Minister for Justice and instead asked senior ministers to use their own cars and claim back for its use.

The 1992 letter now means that since June, Minister Harris has been paid at the higher rate of mileage for a second time this year.

In June, Mr Harris was paid €1,611.20 for 2,727 kilometres by the Department of Health, all at 59c/km, and almost €850 more than would have applied had he been paid at the lower rate.

Should the claims continue at the higher rate, the total amount paid in extra mileage will come to €1,970.

The Department of Health said the Minister had continued to be paid at the higher rate during July as well although details of his claim for that month are not yet available.

They said in a statement that this was consistent with the Department of Public Expenditure circular, a copy of which they released to back up the unusual payment perk.

The confidential document was issued in November 1992 (also an election year and of course long before the nuisance of FOI law!) to personnel officers of each government department.

It referred specifically to junior ministers and said that when calculating mileage allowances in a year in which a general election takes place “a new mileage year” would begin after polling.

It went on to say that one “fresh start” could be allowed in a single calendar year.

The Department of Health said: “[We] can confirm that the Minister’s mileage claims as submitted are fully in order. The questions which has arisen relates to the processing of the recent claims by the Department. When processing these claims the Department made an interpretation of [the] circular … however, in light of your query the Department will examine the interpretation of this circular and in reviewing the matter the Department will ensure the treatment applied to these claims is fully accurate and make any amendments deemed necessary.”

In a statement, the Department of Public Expenditure said that their Minister Paschal Donohoe had claimed mileage at the lower rate since his appointment there after serving earlier in the year at Transport.

I’ve tried to find other examples of the double claim at the higher rate but have not found one yet. Will update this post if I do.

The Department of Public Expenditure said: “The Revenue Commissioners have long regarded the public service rates as being adequate to reimburse the costs of cars and motoring where an individual uses their own car for business reasons.”

This is not the first time the Department of Health has been at the centre of mileage controversy.

Last year, then minister Leo Varadkar had to pay back almost €2,000 after it was discovered that he had been paid at the higher rate twice after switching department.