€2.5Bn savings from closing tax breaks.

Baron von Biffo

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According to RTE, 2 members of the Commission on Taxation have claimed that €2.5Bn in savings could be had by abolition or adjustment of tax breaks.

It is unlikely that the budget will do much about this though because tax breaks disproportionately benefit those at the top of the income scale whereas Lenihans favourite targets are the old, the sick, the poor and PS workers.

Source.
 


D

Dylan2010

They need to go. If something is worth doing you dont need a tax break else end up with empty hotels, bloated pension companies and all the other "hole digging" activities that the gov likes to back. A good start would be pension relief reduced to stardard rate up to salaries of 100K , after that you are on your own
 

firefly123

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Because as you well know baron that would cause a mass exodus of the ballsy wealth creators from these shores. No doubt Ellis island would be on standby to welcome the huddled masses of entrepreneurs who would be raised on golden thrones when they arrive.
 

Watcher2

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According to RTE, 2 members of the Commission on Taxation have claimed that €2.5Bn in savings could be had by abolition or adjustment of tax breaks.

It is unlikely that the budget will do much about this though because tax breaks disproportionately benefit those at the top of the income scale whereas Lenihans favourite targets are the old, the sick, the poor and PS workers.

Source.
One of the reasons I suppose is because the higher earners pay disproportionately more tax. Yeah, yeah, there are those at the top, the very top, that dont pay any - how many is that exactly?

Granted, there are a number of tax breaks that should go - stud fees, all property related ones (including interest relief), but things like pension benefits should not be tampered with. Plus, in the end of the day, the tax foregone is really only tax delayed because it is paid on the pension income received.

Its a great headline grabber though.

PS: on the pnesion breaks I would agree that a realistic cap could be put in there. 150k isw too high. 100K would not be so bad.
 
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slumdog1971

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Because as you well know baron that would cause a mass exodus of the ballsy wealth creators from these shores. No doubt Ellis island would be on standby to welcome the huddled masses of entrepreneurs who would be raised on golden thrones when they arrive.
Absolute rubbish.

There was no flight of capital when the Brits introduced a 50% tax on all bonuses earned in the financial sector.

Surely to God, in any decent society, we should be removing tax breaks which benefit rich people before we take anymore off the poor.

Have FF messed up our moral compass this much ????
 

roc_

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It's not just tax breaks - it's stuff like in the article below...

Getting its sums wrong: state overpaid

This is endemic in nearly all areas of government spending - they are wildly overpaying their buddies for goods and services (as well as giving the same people these tax breaks)...

And don't even let's get started on the grants and subsidies they dole out.

"The state spent more than €195m on sites for schools between 2005 and 2009, which experts say could have been bought for as little as €25m, a Sunday Tribune investigation can reveal.

Among the major beneficiaries of the sales were some of the country's best- known property developers, religious orders and dioceses, as well as several local authorities. >>>>>>>>>>>>>>"
 

firefly123

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Absolute rubbish.

There was no flight of capital when the Brits introduced a 50% tax on all bonuses earned in the financial sector.

Surely to God, in any decent society, we should be removing tax breaks which benefit rich people before we take anymore off the poor.

Have FF messed up our moral compass this much ????
Eh slumdog I think you might have your sarcasm filter switched on there.
 

HarshBuzz

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any more detail on this? Throwing out a headline number without providing specific tax reliefs doesn't really help.

That said, I'm all in favour of removing reliefs especially when it comes to property

let's start with landlords tax releif and then get rid of mortgage interest relief
 

Barnacle

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Landlords tax relief was reduced to 75% but this was only on residential properties. Commercial properties were not touched, relief on such is still granted at 100%.
 

wexfordman

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Wondering about the pension tax break and how this would work!

As previous poster stated, it is currently only a deferral as tax is paid on the income drawn down from your pension in any case, but, say a standardrate is introduced, how would it work?

If say a person pays tax at higher rate, yet is taxes additionally on funds he puts into his pension, then how could he be taxed again at income tax rates on funds he draws down on same penaon when he/she retires ?

Second, if pension contributions are to be taxed, how does this impact contributions for db schemes from both employer and employee ?

How do you value the effective contribution for a db scheme? So an employee who is benefitting from the employers building up of fund for a db scheme is he/she taxed on the full benefit of this contribution in the same manner as say an employee who submits a defined contribution from both smokies and employer ?
 

jacko

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Gilmore has been making this point for ages.

abolishing tax reliefs is an obvious alternative to welfare and pay cuts
 

Watcher2

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Wondering about the pension tax break and how this would work!

As previous poster stated, it is currently only a deferral as tax is paid on the income drawn down from your pension in any case, but, say a standardrate is introduced, how would it work?

If say a person pays tax at higher rate, yet is taxes additionally on funds he puts into his pension, then how could he be taxed again at income tax rates on funds he draws down on same penaon when he/she retires ?

Second, if pension contributions are to be taxed, how does this impact contributions for db schemes from both employer and employee ?

How do you value the effective contribution for a db scheme? So an employee who is benefitting from the employers building up of fund for a db scheme is he/she taxed on the full benefit of this contribution in the same manner as say an employee who submits a defined contribution from both smokies and employer ?
All good questions and the main difficulties with the introduction of standard rating. I suppose for the employers contributions, these would be taxed as benefits in kind, which would be the marginal rate for those taxpayers but you wopuld then get a tax break on the BIK paid at the marginal rate. This is what they do for employer paid health insurance - you pay BIK on the benefit and then receive a tax break on the tax paid. This is the type of idiocy bestowed upon us by our elected and unelecvted officials.
 

CorkHurler

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Its worth pointing out that the standard rating of pension contribution relief will have the effect of increasing the cost of the pension levy to any public sector worker earning over €36k (single person), €45.4k (married couple, one spouse with income), an effective 2% pay cut.
 

HarshBuzz

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Its worth pointing out that the standard rating of pension contribution relief will have the effect of increasing the cost of the pension levy to any public sector worker earning over €36k (single person), €45.4k (married couple, one spouse with income), an effective 2% pay cut.
sure, once it's applied across the board they can hardly complain

anyway, let's not derail this baby
 

Watcher2

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Its worth pointing out that the standard rating of pension contribution relief will have the effect of increasing the cost of the pension levy to any public sector worker earning over €36k (single person), €45.4k (married couple, one spouse with income), an effective 2% pay cut.
It would be more in their line to stamp out the sheer abuse of the costs of pensions to the policy holders than knock the crap out of their tax breaks. They would do a far better long term service to the people of this land if they did. All this hiding behind the tax breaks is helping no one.....oh wait, maybe thats why they want to reduce the tax breaks....they would expoose their friends in the pensions industry for the robbing theiveing so and so's they are.
 

constitutionus

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Its worth pointing out that the standard rating of pension contribution relief will have the effect of increasing the cost of the pension levy to any public sector worker earning over €36k (single person), €45.4k (married couple, one spouse with income), an effective 2% pay cut.
always amazes me people dont realise the majority benificiaries of the pension break are the public sector workers.

the figures quoted here hits every school teacher , doctor , and gardai.
 

Jaqagax

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Isn't a large part of tax relief on pensions actually the cost of giving relief on tax free lump sums. (Almost a non-issue for normal private sector workers.)

Plucking some numbers from the air - say 10,000 public servants retire with an 80k tax free lump sum that'd be 800m tax free paid out. Hard to know precisely but clearly we're hitting large numbers straight away just within the government sector

So the effect of removing pension reliefs could hit the public sector quite hard.

There would be a further loss in income as some of the tax relief lessens on their now substantial pension contributions, and then for retirees there's the loss of a chunk of the tax free lump sum.
 

Grumpy Jack

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On Newstalk now.

The main suggestions were standardising pension relief at 30%, cutting the PAYE tax credit, suspending property tax reliefs and phasing out mortage interest relief early.

Most will affect lower and middle earners the hardest.
 

Baron von Biffo

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Its worth pointing out that the standard rating of pension contribution relief will have the effect of increasing the cost of the pension levy to any public sector worker earning over €36k (single person), €45.4k (married couple, one spouse with income), an effective 2% pay cut.
Abolition or changes will have the same effect in the public and private sectors.
 

CorkHurler

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There appears to be an assumption that these tax incentives serve no useful economic purpose. In fact incentivising people to save (by providing a tax deferal) is a very good thing and its effective withdrawl (why would someone tax a tax saving of 20% only to be taxed at up to 52% when they receive their pension) will destroy the pension industry.
 


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