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0.6% Pension levy, start of something more serious?

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Comments

  • Posts: 0 CMod ✭✭✭✭ Raven Grumpy Number


    ei.sdraob wrote: »
    Guest Post from Daniel Gros: How to Make Ireland Solvent



    Well is anyone in government reading? :rolleyes: Phase 2 is outlined above :eek:

    :(

    Reminds me of the sovereign annuities proposal though ...
    http://www.pensionsboard.ie/en/News_Press/News_Press_Archive/Introduction_of_Sovereign_Annuities_Bonds.html


  • Registered Users, Registered Users 2 Posts: 2,892 ✭✭✭Head The Wall


    Would you put all your eggs in the "irish Govt" basket, I wouldn't trust them not to cock it up.


  • Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    Would you put all your eggs in the "irish Govt" basket, I wouldn't trust them not to cock it up.

    The key word here is "induced", you might not have a choice if your investments and pensions are invested in erm our highly rated state and its banks :pac:


  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    ei.sdraob wrote: »
    The key word here is "induced", you might not have a choice if your investments and pensions are invested in erm our highly rated state and its banks :pac:

    The day the government decide where my pension fund is invested is the day I stop making contributions.
    But I can see the sense in encouraging Irish pension funds to invest in Irish Government bonds if theyre currently invested in just as risky foreign bonds.


  • Posts: 0 [Deleted User]


    dvpower wrote: »
    I can see the sense in encouraging Irish pension funds to invest in Irish Government bonds if theyre currently invested in just as risky foreign bonds.

    Unless the state becomes bankrupt at some point in the future, which is more likely than it was even as recently as a year ago. Would you give OUR government your spare cash to look after for safe keeping based on a promise of a 10% return, given their recent track record?


  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    Unless the state becomes bankrupt at some point in the future, which is more likely than it was even as recently as a year ago. Would you give OUR government your spare cash to look after for safe keeping based on a promise of a 10% return, given their recent track record?

    No. I'm probably a bit too risk averse.
    But if I was in the business of investing in/speculating on risky bonds, then they might as well be Irish ones.


  • Posts: 0 [Deleted User]


    dvpower wrote: »
    No. I'm probably a bit too risk averse.
    But if I was in the business of investing in/speculating on risky bonds, then they might as well be Irish ones.

    Sure, but unless there's a choice in where it's to be invested, then it's just a form of pension capitalism, taking your money to help run the country without you having any choice in the matter. Diversification of funds, and investment management track records would just go out the window.

    Don't forget that the state is making it oblgatory to save into a pension over the course of the next 2 or 3 years despite there already being a multitude of better performing options to invest money for your future if you've got any spare cash, based on pension performance over the last few years. If they further limit that by saying "ok, some or all pension funds from irish workers can only be invested in irish bonds", isn't it just the same as taking your money to gamble with it in the nation's interest, limiting your investment options to unproven/shaky domestic ones, and giving you little or no say in either whether or how money you earned is taken and invested?

    Fundamentally, pension fund managers invest your pension capital in a diversified range of strong, well performing international interests in various countries with a range of different economic conditions, typically companies and schemes headed by experienced board members and experts who have strong track records of delivering for shareholders over the mid to long term. This is to mitigate risk versus potential return over a long period. Investing in irish bonds is basically putting all your money under the control of a government with none of the same track records of success or return, and none of the same culture of accountability as the private sector. Basically it's like putting all of your eggs in one badly managed basket that's very close to the top of a financial cliffside at the moment.

    Seems like something i would use every trick in the book to try to get out of doing....


  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    Sure, but unless there's a choice in where it's to be invested, then it's just a form of pension capitalism, taking your money to help run the country without you having any choice in the matter. Diversification of funds, and investment management track records would just go out the window.
    Inducing pension funds to invest in Irish bonds would be a disaster. Incentives them would be a different matter altogether.

    (Mind you, even if they were to induce them, I'd imagine that they'd do something like insist that x% be invested, so there would still be diversification).


  • Posts: 0 [Deleted User]


    dvpower wrote: »
    Inducing pension funds to invest in Irish bonds would be a disaster. Incentives them would be a different matter altogether.

    If I know Irish government "incentives", that means punitively taxing or levying all pension investment capital first (the current levy), then relaxing it on Irish bond investments a year later like they're doing us all a favour. Watch out for it in budget 2012.

    Net effect = an incentive to invest in irish bonds (or at least less of a disincentive).


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  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    If I know Irish government "incentives", that means punitively taxing or levying all pension investment capital first (the current levy), then relaxing it on Irish bond investments a year later like they're doing us all a favour. Watch out for it in budget 2012.

    Net effect = an incentive to invest in irish bonds (or at least less of a disincentive).

    Interesting possibilties but I wonder if Europe might save us with their single market laws.


  • Closed Accounts Posts: 261 ✭✭Bens


    Well im out of the whole pension thing.
    Calculations show that I might be better off staying in the pension scheme, but calculations for future earnings on pensions mean nothing anymore. Could be wiped out at the stroke of a pen.

    I for one am not on for that sort of gamble.

    What im going to do is stop myself and my wifes voluntary contributions and and just pay off the mortgage or save it in a high interest account (one outside of the grabbing hands of the Irish government). Even if we have to move abroad, thats the plan im looking into.

    http://www.boards.ie/vbulletin/showthread.php?t=2056269147

    I no longer trust that any savings, pension or otherwise, that i've worked hard to put away, will be safe. Actually, after this pension grab, i definitely know they wont be safe. I only wish I could take the money thats already in our pension funds out too.

    I used to always try to convince my friends to start pensions. I really believed in them. Now im sorry I started one at all.


  • Closed Accounts Posts: 87 ✭✭g_moriarty


    Excellent article in the sunday independent today regarding this:
    Sunday May 15 2011

    Private pensions will be ransacked to fund public sector pay and perks
    The pension levy is simply a means to honour a gimmicky election promise, writes Jody Corcoran


    WE ARE in real trouble now. At the first time of asking, the Government has shown itself to be utterly incompetent. Not only is the proposed pension levy grossly inequitable, it may also be unconstitutional. Make no mistake, though, it was designed for no reason other than political expediency.

    Before the election, Fine Gael said no tax increases on income; Labour said no cuts in social welfare. It was glaringly obvious even then: never the twain shall meet.

    After the election, both Fine Gael and Labour were adamant on one thing: public- sector pay levels would remain untouched, notwithstanding the niceties of that three-card trick -- the Croke Park Agreement -- the credibility of which was destroyed by Joe Durkan of the ESRI last week.

    To honour a gimmicky election promise, then, this Jobs Initiative wheeze, it has come up with a desperate measure, an outrageous stroke. No matter how it might try to dress it up otherwise, with its by now familiar 'spin' made to seem as if black is white, the Government has decided to raid the pensions of private-sector workers, such pensions which have already been bled white by this recession.

    When the verbiage is stripped, this is what we are left with: just over 500,000 workers, clinging on by their finger tips in the real economy, are to be robbed of the guts of €4,000, that a few unemployed may (just may) get back to work to pay income tax that the inflated pay of those in the public sector be maintained.

    It is a scandal.

    The coping class is about to be screwed again, therefore, by the very people who had vowed to protect them. Quelle surprise. Fine Gael has just lost the next election, not that that matters a jot anymore, and Labour has shown itself to be true to form.

    With a little imagination, there was another way, a better way, which would have bound in solidarity all sectors in society, public and private, workers and jobless, OAPs and the young, that we might all contribute, as we should, in a fair and equitable way to help lift this country out of a mess.

    This is not designed as yet another attack on the public sector, but somebody has to say it: enough is enough. Within the past fortnight, two men, economists in the public sector, Joe Durkan of the ESRI and Morgan Kelly of UCD, said it: enough is enough.

    Kelly last week set out a radical proposal that may help

    the country avoid bankruptcy, avoid becoming a long-term protectorate of the EU, Europe's answer to Puerto Rico; he said that public sector pay should be slashed by up to 50 per cent.

    Of course Kelly was to be rounded upon by fellow public-sector academics, to be portrayed as a maverick, a loner, as some kind of isolated figure, a recluse, who had gone too far, who had come to believe his own publicity, as decreed by that periodical to the stars, of Hollywood glitz and glamour, Vanity Fair, no less.

    So the jealousy has become naked, the back-biting a form of upfront knifing: the attacks on Kelly are no more than economists in academe jousting to the seductive allure of media whoredom. All of which is to say that, by and large, Kelly was right.

    "At age 50, every man has the face he deserves," said Orwell. What then are we to make of Joe Durkan of the ESRI, aged 68, going on 69? If ever a man spoke the truth last week, it was Uncle Joe.

    Pay in the public sector needed to be cut by 10 per cent, he said: and yes, he said, he would stand in line, at the front of the line, in fact, to take a cut of 20 per cent.

    Kelly has credibility, not just because of what he rightly predicted in the past, but because he is prepared to stand in line too.

    Durkan has even more credibility, because he worked in the real world for six years from 1983 before he returned to the public sector, UCD, in 1989, and from there to retirement, and then back to the ESRI this year, the public sector institute he had first joined in 1969.

    It is not as if such advocates are saying what they are saying for reasons to do with ideology. The facts speak for themselves.

    In 2009, the ESRI used authoritative data to analyse the public/private sector wage gap and to investigate the impact of awards implemented under a number of wage- setting institutions on the differential. The results indicated that public sector pay increased dramatically from 7.7 to 23.5 per cent between 2003 and 2006.

    The ESRI also found that by 2006 senior public-sector workers earned about 10 per cent more than their private sector counterparts, while those in lower-level grades earned between 24 and 32 per cent more.

    Furthermore, the public premium predated the payment of a further two Social Partnership wage deals, along with the pay increases awarded in the second benchmarking exercise.

    The years 2003 to 2006 are instructive: these pay increases, and the two subsequent, were awarded mostly at the height of the Celtic Tiger, and even at the downturn.

    Who paid for this? The taxpayer, mostly through stamp duty on property sales in the bubble era. It is, therefore, incontrovertible: the sector benefitted greatly from the property boom. Yes, the bankers and property developers -- and media owners, through advertising revenue -- also benefitted; but undoubtedly, and excessively, workers in the public sector lapped it up.

    In the real economy, events of the last four years have taken their toll: job losses, pay cuts, pension decimation. The public sector has taken a hit of sorts too: new entrants have been asked to contribute to their own pension; but other than that, and tax increases it pays with the rest of us, it has escaped relatively unscathed.

    And now the private sector is to have its pension raided that the unemployed may find work again, that they may pay tax again -- in effect, and this is the effect, that workers in the public sector will continue to enjoy an outrageous pay differential and perks, to finance, in extreme, taxis from Waterford to Dublin, fine wine

    and even finer art, as we saw

    last week.

    Here is how Colm McCarthy of UCD, formerly of the ESRI -- and, like Joe Durkan, formerly of the real world -- saw it last week: around 520,000 people own €80bn in private-sector pensions, an average of about €154,000 each. The levy will cost them about €920 a year on average.

    In the public sector, however, about 330,000 employees have entitlements under pension arrangements. These schemes are unfunded and therefore have no taxable assets, but the total liability has been estimated at €108bn.

    It follows, then, that the average sum standing to each member in these unfunded schemes is about €327,000, which is more than double the average amount standing to those in funded schemes which are liable to this levy.

    The Jobs Initiative is being funded, in effect, by those who have small occupational pensions: those with the bigger pensions, public servants in the main, will not be contributing.

    As McCarthy says, Michael Noonan looked a bit uncomfortable while explaining this measure to Sharon Ni Bheolain on Tuesday evening. And well he might.

    On Wednesday evening, however, I was a bit confused: RTE, the public service broadcaster, gave an account of the ESRI quarterly report as prepared by Joe Durkan on Six-One News. But at no stage did the RTE report refer to the elephant in the room, as highlighted by the ESRI: that is, the call by Joe Durkan that public sector pay be cut by 10 per cent and that he himself would take a 20 per cent cut.

    Fine Gael and Labour, then, campaigned in a General Election fully aware that the country was broke, but pretending otherwise, that the EU/ IMF/ECB would somehow allow the Government to throw around money on a wheeze which may, or may not, get a few hundred back to work.

    To honour that dubious pledge, it has turned to where

    it is always easiest to turn -- and in doing so has stoked the anger which exists between the public and private sectors, when there is nothing to be gained by this.

    With a little imagination, there was a better way: call it a Jobs Levy, where everybody, bar none, is made to contribute to a national cause.

    Everybody: the unemployed €5 a week, ditto our OAPs; all 1.8 million workers, private and public, €10 a week; those on over 100 grand €20 a week, and so on.

    Surely it should not be beyond the wit of the Government to devise such a levy -- as opposed to the spin, at which it is adept . . . or, well, maybe that's just it, maybe it is beyond them.


  • Closed Accounts Posts: 1,489 ✭✭✭dissed doc


    Pointless article by the Indo. You would need to stop paying all public services workers for a decade, and they would be workign for free, and it still wouldn't touch the level of debt taken on from the investment and development banks.

    The yearly level of interest payments alone on the private bank debt the state has taken on on our behalf is multiples of the entire cost of public services for that year. It is an impossibility; but when the default comes, and there are no police, it will be unpleasant.


  • Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    "At age 50, every man has the face he deserves," said Orwell. What then are we to make of Joe Durkan of the ESRI, aged 68, going on 69? If ever a man spoke the truth last week, it was Uncle Joe.

    Pay in the public sector needed to be cut by 10 per cent, he said: and yes, he said, he would stand in line, at the front of the line, in fact, to take a cut of 20 per cent.


    Ugh oh that wont go down well around these parts


  • Registered Users, Registered Users 2 Posts: 8,514 ✭✭✭BrianD3


    g_moriarty wrote: »
    Excellent article in the sunday independent today regarding this:
    I hope that's a joke. Jody Corcoran is one of the worst of a bad bunch of "journalists" writing for that rag. Have to laugh at this:
    Kelly has credibility, not just because of what he rightly predicted in the past, but because he is prepared to stand in line too.

    Oh, but look what he had to say about Kelly on 14/11/2010:
    Kelly is now a celebrity, whatever that is, he is carefully managed, the hands-down favourite to win 'I'm an Economist . . . Get Me Out of Here', who happened to mostly get it right a few years ago -- in 2006, actually, by which time it was too late anyway.

    He works in the public sector. At an informed guess, I would say his politics is Anybody But Fianna Fail. He is not too keen on Fine Gael either I imagine. That leaves Labour, maybe. Labour will not cut his salary.

    The markets did not factor in any of this, of course.

    Just because Kelly got it mostly right a few years ago, when he was too late, it does not necessarily follow that he is getting it mostly right now, or that he is getting it mostly wrong either, for that matter. Nobody knows, not even Kelly.

    http://www.independent.ie/opinion/analysis/too-much-information-and-all-of-it-uncertain-2419339.html
    :rolleyes:

    The agenda here is clear. When it suits, he vilifies Morgan Kelly for his dismal science and for being a public servant. But when Kelly proposes something (an immediate deficit correction) that would result in slashing of public pay, Corcoran licks his arse.

    I see Corcoran states that he suffers from depression in the below article. Maybe it is a requirement of being a Sunday Indo journalist that you have to suffer from a mental illness?
    http://www.independent.ie/national-news/if-tubridy-wanted-to-get-personal-he-should-have-asked-questions-like-a-man-1879538.html


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  • Registered Users, Registered Users 2 Posts: 12,089 ✭✭✭✭P. Breathnach


    BrianD3 wrote: »
    ... I see Corcoran states that he suffers from depression in the below article. Maybe it is a requirement of being a Sunday Indo journalist that you have to suffer from a mental illness?
    http://www.independent.ie/national-news/if-tubridy-wanted-to-get-personal-he-should-have-asked-questions-like-a-man-1879538.html

    Although I agree that Corcoran is no ornament to the journalistic profession, and that the Independent is a terrible publication, I think the remarks about depression are shameful.


  • Registered Users, Registered Users 2 Posts: 8,514 ✭✭✭BrianD3


    Although I agree that Corcoran is no ornament to the journalistic profession, and that the Independent is a terrible publication, I think the remarks about depression are shameful.
    Well I disagree. He's the one who mentioned his mental illness (and his drinking in the same article)

    If I had suggested that he kill himself then you'd have a point about it being shameful but I didn't.

    I guess if you found that distasteful I better keep my thoughts about Alan Ruddock to myself.


  • Registered Users, Registered Users 2 Posts: 8,514 ✭✭✭BrianD3


    Another Corcoran gem. Interesting that he makes these slurs against public servants when you consider that he has said he suffers from depression. Note the bits I've put in bold.
    http://www.independent.ie/opinion/analysis/public-servants-arent-cut-out-to-be-shiny-happy-people-1930357.html
    The problem is, or has become, that these people are unhappy in their work, but also, it seems to me, unhappy in their lives. The level of cynicism among public sector workers is quite depressing.

    To make matters worse, they do not seem to have, within themselves, the ability to utilise a form of happiness. They believe it is for others to do that for them. They are, in short, inherently dysfunctional people.

    It may be that they see virtue in their unhappiness, because they think that discontent is the only way to overcome social ills.

    But I suspect they were latently unhappy before they joined the public sector. In a way, it was why they were drawn to it in the first place. They were looking for certainty, security, stability, upon which to anchor their unhappy lives. Indeed, many of those in the public sector are second- and third-generation public sector workers, making all the more profound the deep-seated level of their unhappiness.


  • Registered Users, Registered Users 2 Posts: 1,017 ✭✭✭The_Thing


    Excellent article in the sunday independent today regarding this:

    I love seeing all these whiney "oh, woe is me" type articles from the Sindo hacks. I'd say they almost choke on their cornflakes when the Government doesn't take any notice of them.


  • Closed Accounts Posts: 3,359 ✭✭✭cyclopath2001


    g_moriarty wrote: »
    Excellent article in the sunday independent today regarding this:
    Excellent only in the way the Indo reaches new depths of misleading reporting.

    Ever notice the way their stories don't match their headlines? Or, the exclusion of facts that might contradict or undermine the Indo's policies?

    You need to keep the brain in gear if reading an Indo story.


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  • Registered Users, Registered Users 2 Posts: 13,189 ✭✭✭✭jmayo


    g_moriarty wrote: »
    Excellent article in the sunday independent today regarding this:

    After I read the name of the author of that piece I stopped reading.
    The guy is a *************, forum rules prevent me saying what I would like here.

    Remember the character assassination attempt he made on Senator Eugene Reagan where he hinted he would not run for GE because he worked for Goldman Sachs and was somehow dodgy.
    He neglected to say the reason he was not running was because his wife was gravely ill.
    BTW people should know Reagan was the guy that kept the willie o'dea affair in the limelight.
    corcoran being a good ff lackie did not like that.

    So screw corcoran and his health issues, he has no sympathy for anyone elses health issues and instead tries to smear their name with insinuations.

    BTW OP I hope you didn't waste your money on that rag and instead saw it in some bathroom or other.

    I am not allowed discuss …



  • Registered Users, Registered Users 2 Posts: 4,693 ✭✭✭Laminations


    g_moriarty wrote: »
    Excellent article in the sunday independent today regarding this:

    Jody Corcoran?
    It is a scandal

    Wow, didn't realise that pathetic FF hack could recognise a scandal. He certainly didn't recognise any during the last government.
    He is a sad excuse of a journalist

    I see the thread has moved away from discussing he actual levy to hyperbolic slippery slope 'seizure of all pensions' stuff. If you are going to make stuff up and then use that as an excuse to attack the government we may as well build a strwman of them 'taking our first born'. So many people quaking in their boots because the government can do anything now! :eek: When will the madness end!! :rolleyes:


  • Closed Accounts Posts: 370 ✭✭wiseguy


    I see the thread has moved away from discussing he actual levy to hyperbolic slippery slope 'seizure of all pensions' stuff. If you are going to make stuff up and then use that as an excuse to attack the government we may as well build a strwman of them 'taking our first born'. So many people quaking in their boots because the government can do anything now! :eek: When will the madness end!! :rolleyes:

    What the government has done is shatter any remaining confidence.
    Lack of confidence and trust is exactly why the banks and the state are in such a deep mess.
    In a few months we will find out whether the deposit flight has accelerated due to their piggy bank raid.


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    wiseguy wrote: »
    What the government has done is shatter any remaining confidence.
    Lack of confidence and trust is exactly why the banks and the state are in such a deep mess.
    In a few months we will find out whether the deposit flight has accelerated due to their piggy bank raid.

    No, what the government has done is mistakenly assume us to be a grown up people capable of actually analyzing this tax and concluding that it falls into one of the "least worst measures" available to them, since in effect it reduces the tax subsidization of pensions but leaves them heavily tax subsidized (which is a good thing). Unlike other taxation measures this one doesn't just shift cash around the economy, it brings cash back into the economy.

    What we have demonstrated in return is that we are an irrational people capable of believing misinformed rubbish from commentators, and exaggerating that rubbish to the detriment of ourselves - see posts regarding stopping saving in pensions despite the fact that they remain the most tax efficient form of savings available.

    What we have demonstrated is that like in the bubble time, we are not a people to allow pesky things like facts get in the way of what we would like to believe.


  • Closed Accounts Posts: 296 ✭✭Inverse to the power of one!


    No, what the government has done is mistakenly assume us to be a grown up people capable of actually analyzing this tax and concluding that it falls into one of the "least worst measures" available to them, since in effect it reduces the tax subsidization of pensions but leaves them heavily tax subsidized (which is a good thing). Unlike other taxation measures this one doesn't just shift cash around the economy, it brings cash back into the economy.

    Do you mind not inferring that anyone who disagrees with you is not grown up. Also your assuming that the jobs initiative will be successful...bit early yet for such assumptions. Should it fail, it will be yet more money taken with abandon from one group of society who do not have the benefit of a certain croke park agreement.


    What we have demonstrated in return is that we are an irrational people capable of believing misinformed rubbish from commentators, and exaggerating that rubbish to the detriment of ourselves - see posts regarding stopping saving in pensions despite the fact that they remain the most tax efficient form of savings available.
    Ignoring the static, people are showing a deep mistrust of the government to manage their affairs in a fair and equitable manner. I don't think this is irrational, far from it. Pensions were in the past as stable and solid as a saving investment could be, but just as our government has destroyed all confidence in it's sovereign bonds, it is now doing the same with pensions.

    Investors in any market will react when they feel their investment is threatened. Irish depositors and savers are no different. The fact that the government has been disengenous in discriminating in favor of one group over another has not helped this.
    What we have demonstrated is that like in the bubble time, we are not a people to allow pesky things like facts get in the way of what we would like to believe.
    Is anyone?!? Bubbles have happened to other countries and other peoples you know. But the bubble is past and we're now dealing with its consequences, namely that we now have massive debt, a failing economy, and are fast losing the opportunity to address it.
    • Some of us feel that increasing revenues instead of addressing wastage does not help the economy.
    • Some of us feel that protecting one group of working citizens over another is unjust and inequitable.
    • Some of us feel that up until now there has not been enough resistance from the public to give the government the feedback required to make it more considerate when addressing taxation.
    • Some of us feel that the collection and methods of taxation in Ireland are outdated and inefficient.

    If that's juvenile, irrational, and heedless of the facts in your opinion, fair enough, but I don't think your opinion will go anyway towards fixing the problems we face.


  • Registered Users, Registered Users 2 Posts: 7,476 ✭✭✭ardmacha


    Pensions were in the past as stable and solid as a saving investment could be, but just as our government has destroyed all confidence in it's sovereign bonds, it is now doing the same with pensions.

    Don't be so dramatic. The government placed a small tax on pension funds. Now I agree that they should also tax other things, like houses, but they reduced PS pensions by 6 times the amount and everyone here was cheering them on. Everyone, including you, has to contribute.


  • Registered Users, Registered Users 2 Posts: 3,553 ✭✭✭lmimmfn


    ardmacha wrote: »
    Don't be so dramatic. The government placed a small tax on pension funds. Now I agree that they should also tax other things, like houses, but they reduced PS pensions by 6 times the amount and everyone here was cheering them on. Everyone, including you, has to contribute.
    id be very happy if they started taxing bank deposits, say 1% tax on all your savings per year( not dirt i mean based on the deposit, e.g. 100k in the banks means 1000euro a year tax ), theres 80 billion in savings and would generate a nice 800,000million per year, it also means that everythings covered tax wise once the house tax comes in also.

    Ignoring idiots who comment "far right" because they don't even know what it means



  • Closed Accounts Posts: 296 ✭✭Inverse to the power of one!


    ardmacha wrote: »
    Don't be so dramatic. The government placed a small tax on pension funds. Now I agree that they should also tax other things, like houses, but they reduced PS pensions by 6 times the amount and everyone here was cheering them on. Everyone, including you, has to contribute.
    I agree, everyone, but not everyone's included on this one are they? Also link on the PS pensions as it's news to me.

    Also as dramatic as it sounds, that's the nature of investor confidence, smell a rat, run a mile, people are now afraid that this is just the start and the behavior of the govt has given them no reason to think otherwise. That's the nature of confidence, dramatic or otherwise.

    Also, you mention taxing other things, but in this case they couldn't even have the balls to call it that....tax. Before we start taxing all high and sundry, isn't it time we consolidate and streamline existing taxes? Far as I'm concerned Revenue should control the lot! Too many departments having their bit on the side out of the wider control of government.

    Is it too much to ask that we clean up the mess and begin cuts in earnest before taxing the people who drive the economy? It's not as if ad-hoc taxation has worked out for us in previous recessions now is it? Time to have a govt who actually put a little thought in to what they are doing and what the consequences are before resorting to the taxpayer methinks.


  • Posts: 0 [Deleted User]


    you mention taxing other things, but in this case they couldn't even have the balls to call it that....tax.

    This is a bugbear of mine about the current political climate re-new taxes. They call them "levvies", which basically means that they can take them off the top, with no regard to things like non-performing assets, lossmaking investments, tax writeoffs, or, in this case, underperforming or illiquid pension accounts.

    I hate the word "levy". It's come to remind me of a succession of bad governments who only seem interested in coming up with quick fix, greedy, blunt instrument taxes without applying any foresight, and who never seem to have the guts to pick on someone other than the easy targets who dont have a powerful political lobby behind their interests.
    Before we start taxing all high and sundry, isn't it time we consolidate and streamline existing taxes? Far as I'm concerned Revenue should control the lot! Too many departments having their bit on the side out of the wider control of government...

    Sounds like a difficult, politically unpopular decision to me. Efficiency in our public service? Don't hold your breath....

    Is it too much to ask that we clean up the mess and begin cuts in earnest before taxing the people who drive the economy? It's not as if ad-hoc taxation has worked out for us in previous recessions now is it?

    Once again, a tough decision that would require sacrificing some political popularity, and hence percentage points at the local and national elections. I just can't see it happening from a party who has spent so long out of office and are glad to be back in. I had hoped for something different from them based on their election rhetoric, but as usual there is too much short term "look after the party first, and the country second" thinking going on in Leinster house.

    Nobody in power is willing to take the necessary risks to get our budget defecit under control. They are terrified of the unions and of industrial unrest, and instead of making the necessary cuts they will keep putting the tough decisions off and keep hiking taxes and inventing levvies, just like FF did under Haughey and Ahern in the 80's.


  • Registered Users, Registered Users 2 Posts: 4,693 ✭✭✭Laminations


    Also as dramatic as it sounds, that's the nature of investor confidence, smell a rat, run a mile, people are now afraid that this is just the start and the behavior of the govt has given them no reason to think otherwise. That's the nature of confidence, dramatic or otherwise.

    Run a mile to where? Pensions (even with this scary miniscule tax) are still the safest way to save for retirement. Where do you think people will move their money? Under their mattress? Will that give you peace of mind knowing the government can't get their greasy paws on it there? But anti with his screwdriver can so that's not really safer....

    So what investment/savings vehicle has become more attractive now that pensions are out for you?


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  • Registered Users, Registered Users 2 Posts: 4,693 ✭✭✭Laminations


    I had hoped for something different from them based on their election rhetoric, but as usual there is too much short term "look after the party first, and the country second" thinking going on in Leinster house.

    Rather than 'hope' you could have read their election manifesto where this was contained and therefore saved yourself the surprise and shock


  • Closed Accounts Posts: 370 ✭✭wiseguy


    So what investment/savings vehicle has become more attractive now that pensions are out for you?

    There is this investment vehicle called "The Wife" which allows the government not to reach your money as demonstrated yet again on last nights PrimeTime :P

    Jokes aside, one can invest into funds outside of the state, run by safer banks. Do you think the likes of Bertie and Seanie keep their money in Irish banks and funds? Me arse they do :(


  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    I see the thread has moved away from discussing he actual levy to hyperbolic slippery slope 'seizure of all pensions' stuff.
    Yes. Let's stay clear of hyperbole
    If you are going to make stuff up and then use that as an excuse to attack the government we may as well build a strwman of them 'taking our first born'. So many people quaking in their boots because the government can do anything now! :eek: When will the madness end!! :rolleyes:
    Oh dear!

    Seriously - a lot of people are genuinely worried that the government has overstepped the mark by touching their pension savings and they will return again and again to this.


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    dvpower wrote: »
    Seriously - a lot of people are genuinely worried that the government has overstepped the mark by touching their pension savings and they will return again and again to this.

    My question is on what basis people felt that there was a mark to be overstepped?

    Are these the same people who felt that the government overstepped the mark by introducing the USC?

    Any new form of taxation will tax something which was not previously taxed in that manner so does that mean that all new taxation "oversteps a mark" regardless of its impact or any objective justifications (which is what I keep seeing the arguments here returning to)?


  • Closed Accounts Posts: 370 ✭✭wiseguy


    My question is on what basis people felt that there was a mark to be overstepped?

    Are these the same people who felt that the government overstepped the mark by introducing the USC?

    Any new form of taxation will tax something which was not previously taxed in that manner so does that mean that all new taxation "oversteps a mark" regardless of its impact or any objective justifications (which is what I keep seeing the arguments here returning to)?

    Is the now 10 month long deposit flight not evidence of people and companies being worried.
    We will find out in a month whether this makes the flight worse once figures are released by centralbank.ie, and stripping out the 19 billion lodged by NTMA on deposit last week in order to do some creative accounting :rolleyes:
    People are worried and there is no confidence in the system, a banking system can not function without confidence and trust.


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    wiseguy wrote: »
    Is the now 10 month long deposit flight not evidence of people and companies being worried.
    We will find out in a month whether this makes the flight worse once figures are released by centralbank.ie, and stripping out the 19 billion lodged by NTMA on deposit last week...
    People are worried and there is no confidence in the system, a banking system can not function without confidence and trust.

    I agree with all that but my question remains, what can the government tax at this stage which will not cause a knee jerk reaction erosion of trust?


  • Closed Accounts Posts: 370 ✭✭wiseguy


    I agree with all that but my question remains, what can the government tax at this stage which will not cause a knee jerk reaction erosion of trust?

    New taxes or levies or whatever they want to call extracting more money from the population,
    would go down with less resistance if there was actually attempts to cut out the waste in the public services and welfare and introduce real reform.
    People see that the surface has barely been scratched and are resentful of being targeted while so much waste exists.


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    wiseguy wrote: »
    New taxes or levies or whatever they want to call extracting more money from the population,
    would go down with less resistance if there was actually attempts to cut out the waste in the public services and welfare and introduce real reform.
    People see that the surface has barely been scratched and are resentful of being targeted while so much waste exists.

    But I'm not disputing the need for cuts/ reform in the public sector. The sooner that the CPA is torn up the better in the current environment as far as I am concerned.

    However, we should acknowledge that we have had cuts to the PS, and more are afoot, and more will be required after that. But it will take time to get it fit for purpose.

    Should their pensions levy be increased by 0.25% or whatever is necessary to align it with the levy being discussed here (given they don't have pension funds)? Of course it should, I wouldn't be surprised to see it increased by more as a stealth way of further adjusting public sector salaries.

    I would however, acknowledge that their take home pay has gone down 14% or so this year, and I don't think it too much of an ask to give them another 7mths to get used to tightening their belts before we drill another hole in the leather and tell them to take a deep breath and tighten again. We have to hit their take home pay, whereas the levy on the private sector funds avoids doing that.

    But along side cuts and restructuring of the PS we also need ways to increase revenues since cutting alone will not balance our budget. If every tax rise causes knee jerk panic then our chances of getting out of our current predicament get more and more remote.


  • Closed Accounts Posts: 370 ✭✭wiseguy


    But I'm not disputing the need for cuts/ reform in the public sector. The sooner that the CPA is torn up the better in the current environment as far as I am concerned.

    However, we should acknowledge that we have had cuts to the PS, and more are afoot, and more will be required after that. But it will take time to get it fit for purpose.

    Should their pensions levy be increased by 0.25% or whatever is necessary to align it with the levy being discussed here (given they don't have pension funds)? Of course it should, I wouldn't be surprised to see it increased by more as a stealth way of further adjusting public sector salaries.

    I would however, acknowledge that their take home pay has gone down 14% or so this year, and I don't think it too much of an ask to give them another 7mths to get used to tightening their belts before we drill another hole in the leather and tell them to take a deep breath and tighten again. We have to hit their take home pay, whereas the levy on the private sector funds avoids doing that.

    But along side cuts and restructuring of the PS we also need ways to increase revenues since cutting alone will not balance our budget. If every tax rise causes knee jerk panic then our chances of getting out of our current predicament get more and more remote.

    We keep hearing this 14% cut and so on, but no evidence to backup these claims.
    Care to point out any references to the total (which at the end of the day is what matters) public sector wage bill total for 2008,2009,2010?


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  • Posts: 0 [Deleted User]


    http://www.rte.ie/news/2011/0518/central-business.html
    The Central Bank says that net financial wealth has been increasing since the first quarter of 2009, and has risen by 70% since then.

    What jokers - they way they word it sounds like the recession has made us all richer!!

    and
    household net wealth increased by 6% during the last three months of 2010 to reach €99 billion. This works out at €22,125 per head.

    once upon a time household "wealth" included house prices and we were the richest people on earth - remember that craic? Now they ignore property dropping by 50% LOL jokers


    This is preparing the way for the govt to levy savings, no joke, check out the bonfire they had with the pension reserve fund and now private sector pension savings. Label savings as peoples "wealth" and such when the economy is crashing makes it politically acceptable to levy bank savings/seize/confiscate. Happened in Argentina and if you believe Morgan Kelly then the worst is yet to come and what will they do then?? Levy more off the pensions and maybe our bank savings


  • Posts: 0 [Deleted User]


    Run a mile to where? Pensions (even with this scary miniscule tax) are still the safest way to save for retirement.

    I think the point that insences people so much here is that the government, which were elected partly on a platform of political reform and equity have just continued on the same easy option route as their predecessors, and also have announced their intent to tax people's savings capital, which is unprecedented in Ireland. Its not just the 0.6% levy, many people fear that this is the thin end of the wedge, and that other forms of savings will be in the crosshairs next.
    Rather than 'hope' you could have read their election manifesto where this was contained and therefore saved yourself the surprise and shock

    I did, i read all the major party manifestos, and i was sceptical about a lot of the FG and in particular labour proposals, but the extent of some of the rollbacks in light of the worse than predicted financial situation they found themselves in has been surprising.


  • Registered Users, Registered Users 2 Posts: 3,935 ✭✭✭RichardAnd


    I think the point that insences people so much here is that the government, which were elected partly on a platform of political reform and equity have just continued on the same easy option route as their predecessors, and also have announced their intent to tax people's savings capital, which is unprecedented in Ireland. Its not just the 0.6% levy, many people fear that this is the thin end of the wedge, and that other forms of savings will be in the crosshairs next.



    I did, i read all the major party manifestos, and i was sceptical about a lot of the FG and in particular labour proposals, but the extent of some of the rollbacks in light of the worse than predicted financial situation they found themselves in has been surprising.


    I'd agree with what you've said here. This government is nearing the end of what I'd call the "honeymoon" phase. Soon, the electorate will be over the hype of a new government and will be expecting result. If nothing improves or at least, if nothing is seen to be improving, then the FG/Labour government will go the way of the FF government.

    In my opinion, the jobs initiative is the begining of this governments slide into unpopularity. Now I know the Irish have never been a people taken to liking authority in any form and most people, in the best of times, will have something about the current government that irks them. However, the FG election harped on about a jobs program and some poor saps bought into the idea that there would be thousands of jobs created by it. Yet we now see that all if brought about was thousands of unpaid jobs, a few thousands temporary construction jobs and the first steps towards the state helping itself to people's savings.

    I didn't expect much but even I was disapointed by that....I wasn't very surprised though :(


  • Registered Users, Registered Users 2 Posts: 311 ✭✭macannrb


    The honey moon period is well and truely over.

    1) Robbing pensions (which I was only planning to start one this year),
    2) slapping on a levy on insurance policies

    are both easy options that hurt normal people that want to stop relying on the state for easy money.

    And temporary me hole. Sweden did the same in the 70's, insisted it was a temporary measure. But they soon found that it was an easy way to tax people, and so it remained, long after the few years it was meant to.


  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    My question is on what basis people felt that there was a mark to be overstepped?

    Are these the same people who felt that the government overstepped the mark by introducing the USC?

    Any new form of taxation will tax something which was not previously taxed in that manner so does that mean that all new taxation "oversteps a mark" regardless of its impact or any objective justifications (which is what I keep seeing the arguments here returning to)?
    This is different to the USC in that the USC taxes income and this taxes capital. Not capital gains, but capital itself. That's the overstepping if the mark as I see it. Do you not see the distinction?

    My fear is that they will come back again and again to it and there's no measure I can take to avoid it. It is akin to going to my Bank account and simply taking a chunk of my savings (except I can move my saving from my Bank account to under my mattress).


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    dvpower wrote: »
    This is different to the USC in that the USC taxes income and this taxes capital. Not capital gains, but capital itself. That's the overstepping if the mark as I see it. Do you not see the distinction?

    My fear is that they will come back again and again to it and there's no measure I can take to avoid it. It is akin to going to my Bank account and simply taking a chunk of my savings (except I can move my saving from my Bank account to under my mattress).

    I see the distinction in terms of one being a tax on income and one being a tax on capital.

    But you have to remember that the tax on income (USC) denies many of the deductions which we previously associated with a tax on income. Hence my point that every new tax changes perception so when does that perception legitimately prevent the Government levying a new tax?

    This tax on capital, in some small way, takes back a little of the tax relief given to pensions savings so if you take a big picture view the net effect in the vast majority of cases of the combined relief and tax is that pensions are now subject to a smaller relief, not an overall tax.

    If the government were to start levying a wealth tax on your bank account (which they never gave relief for, you earned the income, you paid tax - I assume - on the income as you earned it, you saved a bit of your post tax income) then that would be completely different.

    Your bank account is an apple which the government already took a chunk out of as you earned the income, so coming back for a second chunk would be hugely unfair. I'm not saying impossible in the current climate, but unfair.

    Your pension is a bag of cherries, and on top of the cherries you saved the government threw in a few more. What they are taking out now is less than they (or we the people, we the taxpayers) put into your bag of cherries. So without extrapolating out to governments clawing back other tax reliefs previously given etc etc, on a very simple basis you still have more cherries than you yourself saved. You still have cherries that the taxpayer gave you.

    The bank account and the pension are worlds apart in terms of fairness and I really don't think that the government will use one as precedent for the other.

    The capital in the bank account is post tax, the capital in the pension fund is pre tax.

    If they started taxing capital in bank accounts (other than perhaps as part of a wealth tax across the board) then unless I thought we were about to default the next morning I'd be suggesting taking to the streets.

    Reducing a tax relief (even if doing it through an incredibly complicated mechanism by leaving the relief in place and then taxing something which appears at face value to be different) is one thing.

    Taxing the same income in the hands of the same individual twice is a completely different thing. No civilized state does this, this would be crossing a line in terms of international tax law.

    ps I'm lying when I say no civilized State does this, bank accounts can be caught by general "across the board" wealth taxes, but for the most part bank accounts don't form the majority of anyone's wealth so I'm accepting the collateral damage line on this.


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  • Closed Accounts Posts: 9,183 ✭✭✭dvpower


    I see the distinction in terms of one being a tax on income and one being a tax on capital.
    Well its good that we have that sorted.
    But you have to remember that the tax on income (USC) denies many of the deductions which we previously associated with a tax on income. Hence my point that every new tax changes perception so when does that perception legitimately prevent the Government levying a new tax?
    No doubt that the USC represented a tax rise. I think many reliefs that applied to income tax (like pension contributions) still apply to USC.
    And I've got no problem with tax rises or reduction of tax reliefs. There were many more legitimate options available to the government in relation to pensions relief - reduce contributions relief, reduce the contribution ceiling, tax fund growth, tax or reduce the tax free lump sum.
    This tax on capital, in some small way, takes back a little of the tax relief given to pensions savings so if you take a big picture view the net effect in the vast majority of cases of the combined relief and tax is that pensions are now subject to a smaller relief, not an overall tax.
    It doesn't do this at all. This levy takes a chunk of capital regardless of any relief. If I inherited a lump sum or had a lottery winning or just saved some money and invested it in my pension fund without any income tax relief, the levy will still be applied.

    Granted, almost all money invested in pension funds would have at one point attracted an income tax relief and funds are not subject to tax on their gains (insofar as many funds are currently showing gains), but even if you see this as clawing back past reliefs, it is retrospective taxation. That is overstepping the mark too. (A bit like the government deciding that tax rates were too low in the noughties and applying a higher rate of tax on income earned then).
    If the government were to start levying a wealth tax on your bank account (which they never gave relief for, you earned the income, you paid tax - I assume - on the income as you earned it, you saved a bit of your post tax income) then that would be completely different.
    All the money in my bank account is earned income. They could decide that the rate of tax they applied in the past was too low and I should pay some more now. (Obviously this would be ridiculous, but I don't see it as being too far removed from them dipping into my private pension savings)
    Your bank account is an apple which the government already took a chunk out of as you earned the income, so coming back for a second chunk would be hugely unfair. I'm not saying impossible in the current climate, but unfair.
    My private pension savings is an apple which the government already agreed not to take a chunk out of (on the basis that I would eventually buy an annuity and they would take a chunk then). They've decided to have a little nibble now, but they will be back later when I have an income from it.
    Your pension is a bag of cherries, and on top of the cherries you saved the government threw in a few more. What they are taking out now is less than they (or we the people, we the taxpayers) put into your bag of cherries. So without extrapolating out to governments clawing back other tax reliefs previously given etc etc, on a very simple basis you still have more cherries than you yourself saved. You still have cherries that the taxpayer gave you.
    Let's be very clear here. Every single penny in my pension fund is money I put into it or money the fund earned. The government never put a single cent into it.

    The bank account and the pension are worlds apart in terms of fairness and I really don't think that the government will use one as precedent for the other.

    The capital in the bank account is post tax, the capital in the pension fund is pre tax.
    Exactly - the capital in the pension fund is pre tax. The government will take more tax from it later from the pension income it generates.


  • Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    dvpower wrote: »
    No doubt that the USC represented a tax rise. I think many reliefs that applied to income tax (like pension contributions) still apply to USC.
    But sources of income e.g. forestry which were tax free are not tax free under the USC so that the farmer who planted trees in the expectation of generating tax free income no longer has any right to expect that income to be tax free (and trees like investments take a long time to mature, so while the USC is not retroactive, there is nothing the farmer can do now to avoid it bar chopping down all his saplings).
    dvpower wrote: »
    And I've got no problem with tax rises or reduction of tax reliefs. There were many more legitimate options available to the government in relation to pensions relief - reduce contributions relief, reduce the contribution ceiling, tax fund growth, tax or reduce the tax free lump sum.

    I think this is where our main philosophical difference lies. You're looking at method and I'm looking at result. Any of the above could be hugely more detrimental to the pensions industry/ individuals saving for their pensions than the current levy so I'm against them. You're taking a principled stand against the levy so you view them as less damaging because they won't necessarily create a precedent.
    dvpower wrote: »
    It doesn't do this at all. This levy takes a chunk of capital regardless of any relief. If I inherited a lump sum or had a lottery winning or just saved some money and invested it in my pension fund without any income tax relief, the levy will still be applied.

    If you inherited your lump sum/ lottery winnings in a pension where you got no tax relief then your actions would have been illogical - if you don't get tax relief on the way in why invest in something which would be taxable on the way out? Not changing my mind based on the notion that the levy might adversely affect people who were illogical.
    dvpower wrote: »
    Granted, almost all money invested in pension funds would have at one point attracted an income tax relief and funds are not subject to tax on their gains (insofar as many funds are currently showing gains), but even if you see this as clawing back past reliefs, it is retrospective taxation. That is overstepping the mark too. (A bit like the government deciding that tax rates were too low in the noughties and applying a higher rate of tax on income earned then)

    That depends on whether you view it as negating the income tax relief, or negating the tax free appreciation of the fund relief. You're viewing it as the former which makes your point valid, I'm viewing it as the latter since it seems to equate to about a 20% income tax on most funds. I also think a wealth tax raises more money than a corresponding income tax because if we subject our funds to income tax then we could cause international tax issues which we don't have with the wealth tax, but I agree entirely that it depends on which preferential tax treatment you see this as negating.
    dvpower wrote: »
    My private pension savings is an apple which the government already agreed not to take a chunk out of (on the basis that I would eventually buy an annuity and they would take a chunk then). They've decided to have a little nibble now, but they will be back later when I have an income from it.


    Let's be very clear here. Every single penny in my pension fund is money I put into it or money the fund earned. The government never put a single cent into it.



    Exactly - the capital in the pension fund is pre tax. The government will take more tax from it later from the pension income it generates

    Most of this relates to us differing in which tax relief the levy negates, and because it is structured as a different tax you can interpret it either way.

    However, while I acknowledge that you put every penny into your pension fund you have to acknowledge that the Government forewent taxing rights for a long time both in terms of contributions, and in terms of appreciation within the fund.

    The net effect is that fiscal coffers went into your fund. And even as these particular coffers come back out the net effect will still be that fiscal coffers will have increased your pension fund.

    To my mind that makes it completely different from saying "we didn't tax you heavily enough in the past so we will tax you a bit more", I don't see it as a precedent for this. I see it as being more in line with the USC on forestry income that you expected that certain reliefs would be available, and now those reliefs are worth less than the originally were expected to be worth, which is a change of law risk which we live with every day in terms of taxation.


  • Posts: 0 [Deleted User]


    Not changing my mind based on the notion that the levy might adversely affect people who were illogical.

    What if I invested heavily in a pension which I started five to seven years ago, as per all the best government advice, and logically, made lots of AVC's to take advantage of the available tax incentives? My pension would now be worth about half of what I'd put in over the term, despite my acting very logically and taking advantage of all the best "logical" advice from government, and despite my having made a 50% loss thus far, I would now be being taxed on my investment and enduring further losses.

    Furthermore, the more logical I was and the more AVC's I had made, the more the value of the 0.6% taken from me would be, despite the incurred losses to my initial investment, which are non tax-deductible under the terms of the levy.

    Result of being logical and prudent = you pay more tax. Where's the logic in that??


  • Closed Accounts Posts: 21,727 ✭✭✭✭Godge


    The levy on pensions is clever for a few reasons.

    (1) Most of the pension fund money is invested abroad so any effect on the local economy will be minimal. In contrast the USC took money out of people's pockets that would otherwise be spent on the domestic economy. So minimal effect on local economy good.
    (2) This might encourage some people to stop putting money into pensions and spend it locally. While this has definite long-term consequences for the individuals concerned (no pension) and possible long-term consequences for the state (pick up some of the tab for their pension), in the short term it means more money spent domestically so more tax received. Positive effect on local economy good.

    Big negative for the pensions industry but who cares about another lot of fat cats. Same principles apply in the case of an insurance levy. The reasons above are why such measures make better sense than higher income tax or VAT.


  • Closed Accounts Posts: 21,727 ✭✭✭✭Godge


    By the way, can't see any issue at all in consitutional challenge stuff. Basically, previous court rulings have held that pensions are deferred income and are property and can't be arbitrarily confiscated. But there is nothing arbitrary about a levy. Just hope that the state will seek costs off whoever takes a case and loses as taxpayers don't want to be picking up the tab.


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