Róisín Shortall (Dublin North West, Independent) | Oireachtas source

In last year's budget speech, when speaking about pensions, the Minister for Finance, Deputy Noonan, stated, "I want to clarify Government policy. Firstly, tax relief on pension contributions will only serve to subsidise pension schemes that deliver income up to €60,000 per annum. This will take effect from 1 January 2014. Secondly, the pension levy will not be renewed after 2014." Let us look at what is actually happening. Pension changes are being introduced but they fail to deliver on the €60,000 limit that was promised. In fact, tax relief will continue to be granted to allow funding of pensions significantly in excess of €60,000, in some cases up to €100,000. Among the people who will benefit from this largesse are the very Ministers and senior officials who drafted this change of legislation.

It would be bad enough if that was where it ended, but it is not. The Minister, in a written response to a recent parliamentary question from me, revealed that as a result of not fully implementing the €60,000 limit the tax savings would be €130 million short of his earlier projections. He had projected last year that €250 million would be saved by reducing tax relief on pensions. That projection has been changed to €120 million, a shortfall of €130 million. The Minister went on to say that because the assessed tax savings would have a considerably lower yield it necessitated the imposition of the additional 0.15% pension fund levy. This levy is expected to yield €135 million per annum. There is no doubt these two figures are directly linked. A taxation shortfall arose from not implementing the €60,000 pension tax limit and it is being directly plugged by introducing a new pension levy that will be indiscriminate in affecting all members of funded pension schemes and not just the better off.

We now have the obscene situation where some on pensions of up to €100,000 per annum will not be affected by the budget while those pensioners on, for example, €100 per week will be affected. They will lose income every year the pension levy remains. How on earth can that be fair?

The final insult is that the Ministers and senior officials who drafted the legislation will not only benefit by being allowed to accumulate extra pension arrangements but will not lose out as a result of the levy as they are in unfunded pension arrangements and, hence, will be unaffected by the levy. The idea of justice or the concept that we are all in this together disappears so far down into the distance that at this stage it is out of sight.

The other completely unfair measure is the treatment of separated parents. It is proposed to abolish the one parent family tax credit. This is paid to separated parents in place of a new tax credit as provided for in section 7 of the Bill. This new credit will be paid to only one parent. This has serious consequences for working parents and, in particular, fathers. The impact of this will mean that 4,000 people, including some on the minimum wage, will be brought into the tax net. An extra 5,500 parents will pay tax at the higher rate and, in total, 15,500 parents stand to pay extra income tax next year as a result of these changes.

Could one imagine the uproar if the Minister for Social Protection, Deputy Joan Burton, had announced a cut of €200 per month in child benefit? This measure will have the exact same impact. The current system is not perfect, but in scrapping the tax credit altogether we are throwing the baby out with the bathwater. It is entirely unfair. Despite all of the hot air last year about €500 million in wealth taxes and the big talk this year about ending gold-plated entitlements, what we have ended up with is another win for the golden circle of the Government at the expense of those who do not have a voice.

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