Tax break eases politicians' pain over pensions
Full amount of gift can be offset against income
Published 16/05/2010 | 05:00
POLITICIANS who recently "gifted" their ministerial pensions to the State are to get a large amount back because of tax credits, the Sunday Independent has learned.
Former Taoiseach Bertie Ahern and EU Commissioner Maire Geoghegan-Quinn are among 26 politicians who are to have their pension gifts written off against their income tax.
Mr Ahern surrendered his pension of €98,901 on the day after Ms Geoghegan-Quinn was forced to relinquish her hefty combined TD and ministerial pension of €108,341 amid significant public anger and political pressure.
During the controversy, politicians who wanted to surrender their pensions were told by the Department of Finance that, because of legal difficulties, the only way it could happen was by gifting the amount to the State.
But according to the Revenue Commissioners, any person who gifts money to the Minister for Finance and the State will have that amount written down against their income tax liability. Because of this, the cash benefit of the pension that former ministers would have received will be written off against their taxable income.
In a statement to the Sunday Independent, the Revenue Commissioners said: "Section 483 of the Taxes Consolidation Act 1997 provides that where a person makes a gift of money to the Minister for Finance for use for any purpose for or towards the cost of which public moneys are provided, the amount of the gift will be deducted from or set off against the income of the person chargeable."
The statement continued: "This means that the individual is not chargeable to tax on the amount of the gift made to the Finance Minister for public use purposes."
Commenting on the matter, Fine Gael's finance spokesman Richard Bruton said it made no sense for such a provision to exist.
He said: "I have never heard of this provision but it is clear it needs to be changed. I certainly won't be taking up on this provision because it is neither fair nor logical. The law needs to be changed."
Labour's finance spokeswoman Joan Burton agreed with Mr Bruton saying it made no sense and went against the spirit of surrendering the money in the first place.
"This should be changed at the next Finance Bill. I was one of the first to give the pension up and was told by the Department of Finance that the only way it could be done was by gifting it back. This needs to be changed."
European Commissioner Maire Geoghegan-Quinn initially refused to give up the two political pensions she received on top of a €243,000 EU salary. She eventually relented, and within days 16 other politicians, including Mr Ahern, had also gifted their pensions to the State.
Pat 'the Cope' Gallagher is the only politician who has yet to surrender his pension, while three Fine Gael TDs and FF's Noel Treacy have donated their amounts to various charities. Mr Gallagher yesterday, via his spokesman, said he was waiting on clarification from the Finance Department before he made a decision.
Finance Minister Brian Lenihan reduced the ministerial pensions for sitting TDs by 25 per cent last year. After the next general election, a sitting TD will not be allowed to also pick up a ministerial pension. Despite the controversy, the Government has no plan to advance the deadline.
There were also calls yesterday to stop paying political pensions to former office holders who are still working and earn high incomes.
Two weekends ago, the Sunday Independent revealed that former president Mary Robinson received a pension of more than €180,000 from her time in the Seanad as well as in Aras an Uachtarain, and former attorneys-general Peter Sutherland and Dermot Gleeson -- who are among Ireland's most wealthy people -- receive pensions of €51,538 and €49,841 respectively, even though they are still working.
Ms Burton said that at a time when the country is in such difficulty, those pension payouts should be stopped until the recipients retire.