Written answers

Tuesday, 17 June 2014

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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146. To ask the Minister for Finance the rationale behind the pension levy; the purpose for which the levy will be utilised; if he will consider information (details supplied); and if he will make a statement on the matter. [25263/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I announced in my Budget 2014 speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I have, however, introduced an additional levy on pension funds at 0.15% for 2014 and 2015. I am doing this to, among other things, continue to help fund the Jobs Initiative.

The reduced VAT rate of 9% on tourism and certain other services was one of the very significant and successful measures introduced by the Jobs Initiative. It was due to end in 2013. In my Budget 2014 speech I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The 9% VAT rate has helped to create 15,000 new jobs as well as protecting existing jobs. Since the Budget announcement about the reduction in the Air Travel Tax, airlines have announced the opening up of new routes resulting in significant increases in passenger numbers with the associated increase in tourism activity and employment.

The additional 0.15% levy for 2014 and 2015 will also be used to help make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties although funds from the levy will not be hypothecated or specifically set aside for this purpose. The Government has decided that such liabilities will be met by the Exchequer as they arise.

The chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled, where they decide to do so, to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible.

However, should the option of reducing scheme benefits be taken, in no case may the reduction in an individual member's or class of member's benefits exceed the member's or class of member's share of the levy.

I am conscious of the significant contribution of taxpayers, generally, to the rebalancing of the public finances and the measures introduced to support and develop the economy. There has been progress in these areas. These efforts are ongoing, including the continuation of measures in the Jobs Initiative, designed to improve the economic environment by providing the means to encourage job creation in areas of our economy most likely to deliver that employment in the shortest timeframe possible.

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