Revenue and Government Handling of Taxing Pensioners Unacceptable

11th January 2012

At the return of Oireachtas members from their Christmas break I am calling the Minister for Social Protection and the Government to answer questions over the decision made by the Revenue Commissioners to target pensioners on a higher income into the future, and their subsequent handling of that announcement. The treatment and scaremongering tactics employed by Revenue were grossly unfair and uncalled for.

As a result of the exchange of information between the Department of Social Protection and Revenue a number of inaccuracies with regards to the information previously held on Department of Social Protection pensions came to light. Revenue will now be looking at the cumulative income of all pensioners and whether or not back tax should be payable, arising from these inaccuracies.

As a result of this letters were issued to over 115,000 pensioners which indicated that they may face increased tax demands in the coming year. Into the New Year Revenue have stated that they will be targeting individuals who are over 65 years of age and earning more than €18,000 per annum, or €36,000 for a retired couple.  This essentially means that individuals who are in receipt of a pension from the Department of Social Protection and who have another source of income could face an increased tax burden. It is unclear what the extent of this will be as of yet but it has been estimated by media outlets that it could be something in the region of €4,000.

Since this announcement by Revenue my office has been inundated with an unprecedented level of calls, emails and letters from concerned pensioners across Tipperary and Offaly. Due to the lack of clarity as to the real effect of this announcement they are confused, concerned and fearful. I believe that the letter sent by Revenue was inappropriate. It is totally ambiguous and fails to adequately explain the real effect of this decision on the individual. Indeed this letter has sparked anger in many cases for those who thought they were tax compliant all their lives and have always given full and frank disclosure. It is frustrating for these people, who have done everything right, to now be told that their tax payments may not be fully up to date.

I believe that this move as an attack on those who have worked all their lives and are now seeking to enjoy their retirement. Not alone will additional taxes be a huge burden to be borne by pensioners but the actions of the Revenue caused additional and unnecessary strain.

I believe that it is unconscionable for the state to increase the tax demands on pensioners in any form. From meeting with these pensioners across the constituency it is evident that, in most cases, these people are on a set income and no longer have the capacity to increase their earnings. By Revenue targeting them in this way the detrimental effect will be disproportionately harsh on pensioners. They are now left in a position whereby it is unclear how this increased attention from Revenue will affect them, whether tax returns will be examined on a retrospective basis or what cuts are coming down the line. All these letters did was increase the confusion and distress of pensioners. In many cases the letters were sent to individuals who will not be liable for extra tax on their pension income. It is illogical to distress people in this way without any need or reason.

I welcome the fact that An Taoiseach Enda Kenny has today recognised the confusion caused over this issue. I am now calling on him to ensure that a clear, unequivocal explanation is given to these pensioners as a matter of urgency. The Government must ensure that a fair approach is taken by Revenue on this matter. To retrospectively examine these individuals and expect them to pay a lump sum would cause undue hardship and cannot be allowed. Minister Jan O’Sullivan has today said that the “majority” of pensioners will not be pursued for back tax, she stated that generally Revenue do not go after people for back tax. This flimsy promise is little comfort to the thousands of individuals who received letter and now do not know where they stand.

I am calling for the Government to make clear the position and the real effect that this announcement will have on all individuals. Concrete promises need to be given to protect the welfare of pensioners across the constituency and the country.

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