Pension levy under fire as Dáil debates cuts

Wednesday 04 February 2009 22.58
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Dáil - Legislation to be introduced next month
Dáil - Legislation to be introduced next month
Joan Burton - Critical of Government
Joan Burton - Critical of Government

The Dáil today debated the Government's spending cuts package, which is aimed at saving €2bn this year.

Legislation dealing with the public service pension levy is to be introduced by the beginning of next month.

Public service unions have reacted angrily to the pensions levy on public servants, which will cost an average of 7.5% of gross income.

The Opposition is expected to continue its criticism of the measures during proceedings this afternoon.

Fine Gael leader Enda Kenny yesterday described the plan as a sticking plaster to cover a gaping wound in the public finances.

While Labour leader Eamon Gilmore claimed the Government had added to the difficulties and increased public confusion, while Sinn Féin’s Caoimhghín Ó Caoláin urged the Government concentrate on job creation rather than spending cuts.

The Labour Party’s Finance Spokesperson, Joan Burton, said the government's lack of a clear strategy on the economy will bring the country to a lost decade that will be reflected in the kind of unemployment figures that were delivered this morning.

Ms Burton accused the Government of scapegoating the public sector in its planned pension levy because they were a soft target.

She criticised the government for bailing out the banks while not providing any hope of credit resuming to small businesses.

Minister for Justice Dermot Ahern has said public sector workers with secure jobs need to be willing to make some sacrifices given the current state of the economy.

Mr Ahern said that private individuals would need to invest much more than public sector workers to guarantee the same pension payments.

He told reporters in Dublin this afternoon, ‘something has to give’.

The Minister said the tax band needs to be widened given the tax reforms of recent years.

He said 38% of people now pay no tax.

He said that situation can be sustained when the country is going well and booming but when things are negative other areas to raise taxes need to be examined.

He said the solution is not taxing low income people but looking to other areas.

Mr Ahern said he did not envisage a situation were people would take to the streets on the issue.

He said members of the public understand corrective action needs to be taken.

He said everyone needs to make sacrifices even Government Ministers who have taken a cut in salary and a cut in budgets at their departments.

Minister Ahern said the movers and shakers in society need to show restraint and example to the rest of the public who are loosing their jobs and taking pain.

The pension levy rates are as follows:

A person earning €15,000 gross would pay a pension levy of 3% and the levy rises gradually thereafter.

* 5% on a salary of €25,000
* 6.4% on €35,000
* 7.2% on €45,000
* 7.7% on €55,000
* 8.1% on €65,000
* 8.5% on €85,000
* 8.8% on €100,000
* 9.2% on €150,000
* 9.4% on €200,000
* 9.6% on €300,000

Read the Taoiseach's full Dáil statement

Watch yesterday's Dail statement and news conference

Find out how the Government recovery plan will affect you