SENIOR OFFICIALS from the Revenue Commissioners will be asked to explain before an Oireachtas committee this week why it sent letters seeking payment of extra tax from pensioners who in many cases have no tax liability.
Revenue Commissioners chairwoman Josephine Feehily and officials from the Department of Social Protection will face questions from TDs and Senators at what is likely to be a robust meeting of the Oireachtas committee on finance on Wednesday. The handling of the issue has also sparked a political row about whether the Government knew in advance that pensioners would be targeted for tax in this way.
Fianna Fáil finance spokesman Michael McGrath said the move formed part of last months’s budget strategy, but Ministers chose not to tell older people, to avoid criticism.
“The Government made a political choice not to reveal the details of the initiative at budget time and instead allowed the Revenue to scare the living daylights out of thousands of pensioners around the country this week,” Mr McGrath said.
A spokesman for Minister for Finance Michael Noonan last night rejected the criticism.
He said it was public knowledge that an additional €45 million would be raised as a result of a data-sharing exercise between the Revenue and the Department of Social Protection and other agencies. However, he said the Government did not have a role in the “operational” aspects of how the data would be analysed. This, he said, was a matter for the Revenue.
The Revenue has been fielding thousands of phone calls from worried older people about their pension liabilities. Some 200 staff have been taking calls in recent days and telephone lines will reopen today.
However, in many cases, older people who are fully tax-compliant received letters seeking payment.
Pensions Ombudsman Paul Kenny yesterday expressed concern at the handling of the issue and said it had caused needless anxiety among many older people.
“This seems to have been dealt with in a scattergun approach. Many people who shouldn’t have got letters got them, including people who aren’t even drawing down pensions.
“It seems someone pressed a button too soon,” Mr Kenny said.
Some 150,000 pensioners received letters after Revenue got detailed information from the Department of Social Protection about pension payments for the first time.
About 20,000 were found to have overpaid their taxes. An estimated 115,000 older people have tax liabilities, the majority of whom are on smaller occupational pensions.
Those who have not declared these earnings are unlikely to be pursued for outstanding tax liabilities. This, officials say, is because it would not make economic sense to pursue what are very small amounts.
Older people with a State pension do not have to pay tax on additional income of less than €18,000 if single and €36,000 if married.
A spokesman for Mr Noonan said this did not represent “an amnesty” and was standard procedure for the Revenue. However, they will have to pay extra tax this year because tax authorities were not aware they were receiving State benefits in addition to their private pension. In many cases, the extra tax will be very modest, he said. The main focus will be on retired people with large private pensions or additional forms of income worth more than €50,000. This will affect about 2,500 older people.
Labour TD Alex White, chairman of the Oireachtas committee on finance, confirmed that Deputies would be seeking answers from the Revenue and Department of Social Protection at a meeting this week.
Fine Gael TD Billy Timmins, a member of the committee, said it was important that pensioners had full clarity on where they stood and that lessons be learned over the handling of the affair: “This is not the way to treat people. Lessons should have been learned a long time ago.”
Revenue has defended its decision to communicate with taxpayers directly. It said public information campaigns did not work as well as individually tailored information.
It also defended sending out the letter in January, because this would allow the tax liability to be spread out over the entire year.
The Revenue Commissioners’ helplines will reopen again today. The full list of contact numbers for different parts of the country is available on its website, www.revenue.ie.