Written answers

Wednesday, 6 May 2009

8:00 pm

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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Question 175: To ask the Minister for Finance when, arising from his budget announcement of changes in pension related deductions for public servants to ameliorate the impact on lower paid public servants, the new arrangements will come into effect; if it is intended to refund deductions made at the higher, pre-budget rates; and if he will make a statement on the matter. [17638/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Financial Emergency Measures in the Public Interest Act 2009 introduced a pension-related deduction of 3% on the first €15,000, 6% on the next €5,000 and 10% on the remainder of the remuneration of public servants. In order to ameliorate the impact of the deduction on lower paid public servants with a partial offset by an increase on earnings above €60,000, new rates and bands have been introduced with effect from 1 May 2009, as follows: · First €15,000 of earnings - exempt · Between €15,000 and €20,000 - 5% · Between €20,000 and €60,000 - 10% · Above €60,000 - 10.5%

The deduction for the initial two month period 1 March to 30 April 2009 has been made in accordance with the rates provided for in the Financial Emergency Measures in the Public Interest Act 2009. The revised rates will apply for the period 1 May to 31 December 2009.

Photo of Joe CareyJoe Carey (Clare, Fine Gael)
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Question 176: To ask the Minister for Finance if he will end the travel tax imposed on Shannon Airport; and if he will make a statement on the matter. [17685/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy is aware, I announced in Budget 2009 that an air travel tax would come into force in respect of passengers departing from Irish airports on and from 30 March 2009. A general rate of €10 per passenger would apply, with a lower rate of €2 for shorter journeys. The Finance (No. 2) Act 2008 confirms the introduction of an air travel tax from 30 March 2009. However, I took account of concerns raised by the regional airports particularly those on the western seaboard. The lower rate of €2 will apply to departures from any Irish airport where the destination is 300kms or less from Dublin airport. This means that all Irish departures to locations such as Manchester, Liverpool and Glasgow will be subject to the €2 rate.

We currently face significant financial challenges and the air travel tax is an important revenue raising measure. Ireland is not unique in regard to applying a tax on air travel. Other countries within the EU apply similar taxes including, the UK and France, as do Australia and New Zealand. The proposed rates for the Irish air travel tax are not unreasonable both for shorter and longer journeys, when compared to rates in other countries.

It should be recognised that tourists will only be subject to the tax on their return journey. The additional €10 or €2 in the context of a much larger purchasing decision involving travel, hotel expenditures etc. shouldn't have much of an effect on tourist numbers. I appreciate the airline industry continues to go through a difficult period. However, this difficult trading period has, in addition to weak world economic activity, been largely driven by a massive spike in oil prices. Oil prices have now halved from the all-time high prices experienced last year.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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Question 177: To ask the Minister for Finance if he will address the concerns of research staff in relation to the pension levy taking account of certain issues (details supplied); and if he will make a statement on the matter. [17703/09]

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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Question 179: To ask the Minister for Finance his views on correspondence (details supplied); and if he will make a statement on the matter. [17715/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 177 and 179 together.

Public servants who are members of public service pension schemes are liable to pay the pension-related deduction legislated for in the Financial Emergency Measures in the Public Interest Act 2009. On this basis, third-level researchers on fixed-term and temporary contracts must pay the deduction, since they are members of the relevant occupational pension schemes. They are just one of many groups of non-permanent public servants paying the deduction. Distinctions between public servants on the basis of whether they are permanent or temporary, and if temporary what contract duration applies, are irrelevant insofar as liability to pay the deduction is concerned. The pay of the post, in terms of whether it features incremental progression, is likewise irrelevant.

In recent years fixed-term researchers in third-level institutions have been made pensionable, and this has significantly improved the attractiveness of a research career. These researchers accrue pensionable service even for short-duration appointments and that service can be aggregated with past and future service in other pensionable public service employment.

Section 6 of the Act provides for a refund of the deduction in certain circumstances, and should reassure third-level researchers on short-term non-renewable contracts who have no prior public service employment history and who may be concerned about accruing no pension benefit at the expiry of their contract due to insufficient service. A deduction refund may be payable provided that the departing employee has accrued no benefits under any public service pension scheme, has not received a payment in lieu of scheme membership and has not transferred the service to another public service pension scheme.

In light of all the above factors, I am satisfied that it is fair and appropriate that public servants on fixed-term and temporary contracts, including third-level researchers, are subject to the pension-related deduction. I might add that, as the Deputy may be aware, in order to ameliorate the impact of the deduction on lower paid public servants (with a partial offset by an increase on earnings above €60,000) I announced, in the Supplementary Budget of 7 April 2009, a change to the structure of the deduction which will exempt the first €15,000 of earnings. This should be of benefit to third-level researchers.

Finally, in relation to the bodies listed in the Schedule to the Act ('Bodies to which the definition of 'Public Service Body' does not apply) I would point out that these are organisations with a commercial remit and have pay and pensions which are not funded by the Exchequer. Accordingly, such bodies would not be liable to pay the pension-related deduction.

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