Richard Bruton (Dublin North Central, Fine Gael)

As amendment No. 47 in my name is in the same vein as amendment No. 1, the amendments have been grouped together for the purposes of debate. For this reason, I beg the Acting Chairman's indulgence to allow me to address my amendment which I will not have an opportunity to discuss later in the debate.

It would be appropriate to include a sunset clause in the Bill because the proposals effectively amount to a tax masquerading as a pension levy. No one would pretend that this is a pension levy in any true meaning of the word. The funds raised will not be placed in a pension fund to provide for future pensions and will not be related to the pension benefit which different public servants derive from the public service pension. The Minister provided some detail showing the substantial pension benefits some people enjoy. The actuarial value of the pension of an assistant secretary or Secretary General, for example, is probably between 40% and 50%, whereas the actuarial value of the pension of a public servant earning a relatively low income is comparatively small in percentage terms. If, under the proposed levy, a contribution was sought which was genuinely related to the benefit the employee stood to receive in later life, it would be structured in an entirely different manner. In addition, people would be able to understand the system and would expect it to be funded and we would move towards a different approach to the treatment of pensions in the public service. That is not the case, however, because this levy is simply a tax.

It is important to realise, as Members on both sides have stated, that the structure of the proposed levy is unfair. It is worth examining the different structure adopted for the levy compared to other elements of the tax code. Those earning less than €18,300 per annum are exempted from paying the income levy — the "Lenihan levy" — whereas this same group will pay 3% under the proposed pension levy. Under the Lenihan levy, the 2% deduction of income does not apply until earnings exceed €100,000 and the 3% deduction is not levied until income exceeds €250,000.

The Minister, when he had time to contemplate what was equitable in imposing the levy, took a view that the income levy should be steeply progressive, with those on high incomes paying three times the rate of those on low incomes. Those on very low incomes were not required to pay anything under the levy. After some mature reflection on his initial proposal, the Minister changed the structure.

The manner in which the burden is spread in the proposed pension levy is an indication of the Government's thinking on fairness. The pension levy has an entirely different structure from that of the income levy, with those earning the minimum wage and less facing a net charge of 3%, while those earning €300,000 per annum face a 5% net charge, rather than three, four or five times the rate facing the lowest income earners. No one would argue that this tax structure is proportionate to the benefit people will derive from their pension, their ability to pay or the family burdens they may have to bear. Like me, the Minister and the Acting Chairman will have encountered harrowing cases of people experiencing major pressures arising from mortgages and family obligations. They are struggling hard to make ends meet, and this is tipping them over the edge.

The proposal has not been structured in a way that considers ability to pay, responsibilities carried, or benefits derived, and it does not contribute to the long-term health of pensions. We know this is an attempt to reduce the cost of the public service. We should be honest with ourselves in this regard. I do not believe it is a fair way of reducing the cost of the public service. If the Government wanted to reduce the public service pay bill it would not structure it in this way — it would not be looking to penalise those at the very bottom.

The argument I am making is that it is not a fair, balanced, proportionate and long-term measure. The Government should recognise that it is a temporary measure. Many people on this side of the House and outside the House do not feel it is fairly structured. The Government seems determined to push ahead nevertheless and is not likely to entertain any amendments in the course of the debate. Thus, at the very minimum the Minister needs to accept this amendment so that we can revisit this issue at a time when the economy, it is to be hoped, is in a stronger position, and we can recognise that all the anomalies and unfair aspects of the proposal should be changed. I am not happy about the fact that the Government has turned its face against attempts to tweak the proposal to make it fairer. I do not expect some of the amendments I have tabled for later in the Bill to be entertained, but this is one that should be entertained and I hope the Minister will support it.

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