Arguments for pension tax make no sense

I AM disappointed at the very poor quality of the arguments used by the Cabinet in favour of the tax on private sector pension funds.

Arguing that the pensions industry suggested it first forgets that they did so as an alternative to cutting the tax relief on contributions to 20%. Now not only do we have the pension tax, but the tax relief is still going to be cut to 20%.

Arguing that the pensions industry charges too much and can easily absorb the tax asks why not tax their fees instead so that ordinary middle class voters aren’t hit. Arguing that it is to fund the jobs initiative forgets that the Programme for Government makes no mention of this tax at all, never mind using it for the jobs initiative.

Arguing that it is rich of the private sector to whinge about a 0.6% tax when the public sector pays a 7% levy ignores that the public levy is a contribution which has 41% tax relief. And not only have the private sector being paying their own contributions for decades, but now the value of their fund is taxed as well.

Arguing that private pension funds deserve to be taxed because they disloyally invested abroad questions what would have happened to the value of private pension funds if they had been solely invested in Ireland over the past decade?

Arguing that it ensures the wealthy contribute their fair share ignores that Approved Retirement Funds which are enjoyed by the wealthy are exempt, and the wealthy will move their funds offshore where they can’t be taxed, meaning that only ordinary middle class voters will be hit.

A lesson that we must learn from our financial meltdown is that we must reward financial prudence and punish financial recklessness. Punishing private sector middle-class voters for making adequate provision for their retirement is not the right lesson to learn.

It is obvious that the Cabinet was poorly briefed about this tax. If the Cabinet had received proper advice, they would have surely realised that this tax is as daft as VAT on children’s shoes.

Jason Fitzharris

Swords

Co Dublin