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Archive for January 7th, 2012

Yesterday, pensioners throughout the country queued at Revenue Commissioners (Irish Tax authorities) offices following receipt of a letter in the last couple of days advising them that they have been paid State pensions without the appropriate tax deductions. This follows the discovery that 115,000 pensioners who are in receipt of both private and state pensions may not have paid the correct tax liability because the State has hitherto not examined the combination of information at the Revenue Commissioners and the Department of Social Protection. Many pensioners appeared anxious and upset that they may face an unforeseen liability in 2012 of up to €4,400 per annum and that the Revenue can theoretically seek to claw-back tax for the past four years as well. Others were more philosophical and seemed to accept that if they collected the income, they should pay the correct tax.

I suppose there’s never a good time to be told that you need pay unforeseen tax, but the timing of the mail-out of letters to the pensioners is curious. When Minister for Finance Michael Noonan stood up in the Dail on 6th December 2011 to deliver the final part of Budget 2012, there was no mention whatsoever of the imminent claw-back for tax on pensions. Nor was there any mention of this development in Minister for Public Expenditure and Reform, Brendan Howlin’s Budget 2012 speech on 5th December, 2012.

But, the subsequent Budget 2012 document which was published on 7th December 2011 set out the financial effect of the announced changes – this is what it said:

And apparently in radio interviews yesterday, a spokesman for the Revenue Commissioners, Declan Rigney is understood to have confirmed that the tax on pensioners in 2012 had already been accounted for in state finances.

So why wasn’t there an earlier announcement by Minister Noonan, or Minister for Social Protection Joan Burton?

Surely there wasn’t a cynical ploy to defer the news until after the Christmas period which accounts for much domestic economic activity, particularly in the retail sector?

And surely the Revenue Commissioners should be able to give better estimates of the underpayment of tax, if they have known about the issue for some months? How much will be collected in 2012 and how much was underpaid in each of the last four years which legally, can be clawed back from pensioners?

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