asked the Minister for Finance if income tax is payable on (a) widows' pension, (b) old age pension, (c) invalidity pension and (d) retirement pension of the Department of Social Welfare, if the recipient has income from another source.
Ceisteanna—Questions. Oral Answers. - Income Tax Payments.
27.
The widows' pension, old age pension, invalidity pension and retirement pension, payable under the Social Welfare Acts, are income for income tax purposes. Income tax is payable, of course, only if the person's total income is in excess of the allowances to which he is entitled.
However, liability to tax is normally unlikely to arise in the case of the non-contributory pensions (widows' and old age) since these awards would have been subject to a means test. In the case of the contributory pensions (widows', old age, invalidity and retirement) liability to tax could only arise where the effective tax exemption limits are exceeded, that is, where total income exceeds £399 a year for a single man, £424 a year for a widow or widower and £674 a year for a married man.
It is absolutely ridiculous to suggest that a widow in receipt of a widow's pension should have to pay income tax on her pension. The Department of Social Welfare has pulled a fast one by persuading people to go from disability benefit and from unemployment benefit at 65 on to an invalidity pension or a retirement pension so that they can proceed to collect income tax on a combined income which they would not otherwise have been able to collect. Could the Minister for Finance not talk to the Revenue Commissioners and tell them they are scraping the bottom of the barrel where this is being done?
With regard to the first part of the question I cannot accept the proposition that a widow should not pay income tax on her pension because this depends on what her income is. Where it is a non-contributory pension it is most unlikely——
We know that, noncontributory pension is starvation.
——she will pay tax but if it is a contributory pension her income could be quite substantial and there is no reason that I can see why she should not pay tax on her income.
Except that her husband by paying stamps has paid that pension.
With regard to the second part of the Deputy's question we dealt with that the other day. There is an option open to the people concerned in the invalidity pension cases.
Can the Minister say whether or not these people were notified before this took place that income tax would be deducted?
I cannot say that. I was not asked.
I am calling Question No. 28.
Would a recipient of unemployment benefit and a retirement pension from his firm have tax charged on the total income to the house? Why should we differentiate when it is not charged on the total unemployment benefit and retirement pension from his firm?
There is a difference in income tax law between pension and benefit.
Where a person either through her own efforts or those of her husband has contributed to the pensions she receives it is unfair in principle for the State to tax that particular pensioner.
I am afraid I could not accept that proposition. If it is acceptable would the same principle apply in the case of a person who has arranged a pension privately? Is that a proposition we could accept? I do not think it is.
Is it not a fact that the weekly contributions have been taxed in previous years?
I think not. Normally the pensions scheme contributions are not taxed.
Only half are not taxed. The Minister is aware that half are taxed.
That is not so.
I am calling Question No. 28.