Thursday 22 February 2018

James Fitzsimons: Pension panic could have been avoided if agencies co-operated

It will be difficult for Revenue to write off arrears, but it needs to undo the damage, says James Fitzsimons

James Fitzsimons

When the Revenue wrote to 115,000 pensioners to say they have tax arrears it caused outrage and concern. If the job was done right this could have been avoided.



Based on information from the Department of Social Protection, the Revenue Commissioners updated their records to collect the correct income tax from social welfare pensioners in 2012. They include old age pensioners, widows and invalidity pensions. You cannot fault the Revenue for using the information to make the system more efficient. But it's a pity it took so long.

People believe if they pay tax under PAYE, the system gets it right. Ireland may be one of the easiest places in the world to pay and claim back tax, but that doesn't mean everybody understands it. The Revenue may have left it too late to get tax from those who have little more than a subsistence existence. Of all the taxable income on record, the money the Government pays fails to be taxed. One simple solution would be for the Department of Social Protection to operate PAYE like any other business or pension company. It could at least take instructions from the Revenue Commissioners before payments begin. One way or another, either the Revenue or the Department of Social Protection should take responsibility for collecting the right tax.

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