Updated, 19:11
IRELAND IS GIVING UP at least €200 million in tax revenue per year on tax products to people who earn over €100,000 per year, former junior minister Roisín Shortall has claimed.
Shortall says Retirement Annuity Contracts, a pension product usually used by the self-employed, are meaning major tax breaks for high earners – with 70 per cent of such contracts held by people earning six-figure salaries.
Meanwhile, figures provided to Shortall by finance minister Michael Noonan also show that 58 per cent of Personal Retirement Savings Accounts are held by people earning similar figures. The figures relate to the 2009 calendar year.
“Tax relief on pension contributions costs the State over €2 billion a year,” Shortall said in a statement this afternoon.
“Despite this excessive cost, these reliefs receive far less attention than, for instance, the cost of Child Benefit which has a similar price tag.
The former junior minister – who quit the Labour parliamentarty party amid the row over the performance of James Reilly as Minister for Health, but who remains an ordinary party member – said the figures highlighted a “profound imbalance” in Ireland’s pensions policy.
“Those who have the most, gain the most out of the current system,” the Dublin North-West TD said.
“Indeed, this is just the tip of the iceberg. If income distribution data were available for other pension arrangements, it is certain that the total cost of providing tax breaks for high earners would be much higher.”
The TD has called for the Budget measures being enacted next month to reduce the annual cap on pension contributions for which employees can claim tax relief.
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