Róisín Shortall (Dublin North West, Labour)

I refer to Financial Resolution No. 9 dealing with tax relief on pensions. I broadly agree with the approach adopted in this resolution, but I have some questions. That the limit is being introduced is an admission on behalf of the Government and the Pensions Board that the pensions policy pursued in recent years is an utterly failed policy. It facilitated rich people to put by money to ensure their retirement fund would provide them with an income which would keep them in the standard to which they had become accustomed. The policy did little or nothing to ensure people on middle or lower incomes were protected against poverty in their old age. Consider what was happening up to now with tax relief on pensions. There has been an extraordinary system in terms of redistributing wealth upwards to the better off, and it has been extremely regressive.

Consider the most recent figures available. Approximately 6,000 people who earned in excess of €250,000 availed of the maximum possible relief. These people were stashing away almost €50,000 and getting €20,000 in tax relief every year. There is no justification for this whatsoever. People earning more than €250,000 are welcome to do whatever they like to provide for their retirement, but there is no reason why the taxpayer should subsidise them. Such people were being given tax relief of €20,000, which is the equivalent of being handed €20,000 every year and double the State old age pension. It is an intolerable situation and impossible to defend on any grounds of equity.

While I welcome the introduction of the earnings ceiling of €150,000, why did the Government not go further in that regard? The proposals could have saved in excess of €100 million. It could have brought the earnings limit down to €130,000 and saved an extra €56 million. Most people would agree it would have been fair to have an individual earnings limit of €100,000, which is more than generous. The Government could have saved €287 million if it decided to be fair in its approach on pensions. This would have allowed for those on the lowest incomes up to the average industrial wage to be taken out of the tax net in respect of the levy. Instead, the Government has allowed those who are pretty well off, with incomes of more than €100,000 up to €150,000, to continue to get tax relief at the top rate. Rather than touch these people it is now penalising people with very low incomes with the 1% levy.

Earlier I asked the Tánaiste privately if this levy applies to community employment earnings. It would seem from the briefings available that it does apply, which is scandalous. These schemes include people on the very lowest rung of the employment ladder, trying to improve their skills to enable them to enter the open market soon. The Government is now going to tax such people with the 1% levy on the meagre allowances they are paid for community employment schemes. This makes no sense whatsoever and there is no argument for it on equity grounds.

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