Mary Flaherty
Question:107 Miss Flaherty asked the Minister for Finance if he proposes to implement the findings of the National Pensions Board on tax treatment of occupational pensions for the self-employed.
Written Answers. - National Pensions Board Recommendation.
The main recommendation of the National Pensions Board in this area was that the present figure of 15 per cent, as the amount of net relevant earnings contributed to a retirement annuity scheme on which self-employed taxpayers can obtain income tax relief, should be increased. While the board did not recommend any specific increased limit, it felt that 20 per cent would be appropriate.
The board explicitly recognised that this recommendation would have cost implications for the Exchequer and in fact the increased limit mentioned could cost up to £7 million per annum in tax foregone. The provision of pensions for the self-employed must also be seen in the context of the introduction of social insurance for them in 1988, at a rate — introduced on a phased basis — less than that recommended by the majority of the National Pensions Board for the benefits for which the self-employed became insured. In addition, rather than narrowing the tax base by the extension of reliefs, the focus of income tax policy in recent years has been on reducing tax rates, and some reliefs have in fact been restricted in order to meet a small part of the cost of funding these reductions. In the circumstances, I have no plans to implement the recommendation.