Ciara Conway (Waterford, Labour)
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72. To ask the Minister for Finance his plans to bring the State contributory pension within the standard PAYE taxing procedures (details supplied); and if he will make a statement on the matter. [19421/13]

Michael Noonan (Limerick City, Fine Gael)
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The proposal put forward is that the contributory State pension should be taxed at source by the Department of Social Protection (DSP), and I am advised by the Revenue Commissioners that they agree with the proposal. Furthermore, it was recommended in the Report of the Commission on Taxation in 2009. The current situation is that a pensioner is liable to pay tax through the Income Tax self-assessment system or is taxed through the PAYE system based on an adjustment of tax credits. The Department of Social Protection provides details electronically to Revenue of the recipients of a range of DSP payments and their pension amounts on a weekly basis, and this also includes details of increases and decreases in the pension payment.

I am advised that while the Revenue Commissioners agree with the proposal that tax should be deducted at source by DSP there are a number of issues for DSP that need to be considered and addressed before it could be introduced. It is clear that deduction at source is the most efficient way to collect the right amount of tax from pensioners who have sources of income other than the State pension.