Pat Leahy: Top public servants are among our wealthiest pensioners – that’s why they’re getting caught for tax
https://www.irishtimes.com/opinion/2024/09/21/irelands-wealthiest-pensioners-will-benefit-from-raised-tax-threshold-while-800000-workers-have-no-pension-at-all/
Posted by funpubquiz
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Ireland is a cosy cartel. Most of these public sector pensioners screwed over their younger colleagues not just with pensions but housing and everything else, never mind the rest of the country who don’t even have pensions.
FG now looking to change inheritance tax and pension laws to benefit this tiny minority of very wealthy people.
They rushed out a detailed change to the SFT which affected only a small group of mostly civil servants, meanwhile ordinary people still can’t realistically invest in anything other than property because the report on deemed disposal/ETF taxation is not ready yet. Not that I think any of the opposition is better, they will likely be worse, but the Minister needs to better prioritise where his departments time is spent.
So the SFT is an example of stealth taxation by way of not indexing tax to inflation. If you disagree with the concept of people having larger pension pots that’s fine – but whatever you think the limit should be, government often sets it and then leaves it for years, such that inflation erodes the real value as wages and prices increase.
In this case the SFT was actually north of €5m pre crash. It was reduced twice during the recession, to €2m in 2014. The pensions council did an analysis recently as part of the prep for this move, that basically says it should be closer to €3m now (a decade later) to keep up with inflation. This increase will be phased in between now and 2029, so in real terms it will likely continue to be worth less than it was in 2014.
Government catches us all with all sorts of non-indexed taxes – they don’t always raise the limits between tax bands for example, and dragged a lot of people into the higher band when their wages went up in nominal terms, but not in real terms.
There’s other taxes where they do this too. For example you have a €1,270 annual tax free allowance for capital gains (say, on trading shares). Odd amount of money, right? What’s the €70 all about…? Well, the allowance was £1,000 and when we switched to Euro, the exchange rate was €1.27… that was in January 1999. In real terms that €1,270 should be €2,240 today to be worth the same amount of money.
I could see the Irish times article now. “Share speculators to see allowance almost doubled”
(Btw there’s a bunch of other allowances that are still at their 1999 level – if you are on a fishing vessel for 80 days a year, for example, it’s still €1,270).
IMO all taxes should be indexed to a measure of inflation to get rid of this business of “government is awarding us with €x in the budget” or (in this case) “isn’t it scandalous they’re raising this to €x”