Jim Daly (Cork South West, Fine Gael)
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Question 65: To ask the Minister for Finance the savings that would be achieved by the Exchequer if a new tax was introduced on a temporary basis to tax all pension payments to retired public servants in excess of €50,000 at seventy five per cent; and if he will make a statement on the matter. [7492/12]

Michael Noonan (Limerick City, Fine Gael)
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Retired public servants in receipt of a pension in excess of €50,000 per annum are currently subject to income tax at 41% and Universal Social Charge at 7% or 4% if they are 70 years old or over. A new temporary charge of 75% on income in excess of €50,000 could bring their tax liability on this income to 123%. I assume that this is not the Deputy's intention. Furthermore, I am of the opinion that imposing a temporary tax of 75% on a specific class of pensioner may be considered arbitrary and disproportionate and could, therefore, pose constitutional difficulties.

The Deputy may be making the point that savings could be made for the Exchequer by reducing pensions paid to public service pensioners. This is a matter in the first instance for my colleague the Minister for Public Expenditure and Reform. The Deputy may be aware that the Financial Emergency Measures in the Public Interest Act 2010 has reduced public service pensions, in a progressive manner, with reduction rates of 12% and 20% applying to public service pensions in excess of €60,000 and €100,000, respectively.