Dept of Finance Report: We are a welfare nation

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How many people are receiving State pensions and not declaring that additional income on an annual tax return, it would help if this were taxed at source rather than paid out gross.
 
Protocol said:
Purple,

you do realise SI exists for good, economic reasons?

Many countries have various forms of SI for many decades.

Are they all wrong, and you are correct?
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Protocol, you do realise that we can't afford the pensions we are currently paying and without reform it will make the financial crisis look like a walk in the park?
What good economic reasons are there for that?
Have we not sold our children down the river enough?

Social Insurance is a good thing when it is sustainable and helps those who need help. A cohort who is less likely to live in poverty gets handouts, medical cards and tax breaks (reduced rates of income tax and bigger allowances) while those who are more likely to live in poverty get far less. That's not much of a social insurance system in my book.
 
Purple said:
Protocol, you do realise that we can't afford the pensions we are currently paying and without reform it will make the financial crisis look like a walk in the park?
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Your suggestions in this thread will further reward those who don't contribute at the expense of those who do.

People respond to incentives: if you make it worthwhile not to contribute, they won't.
 
Palerider said:
How many people are receiving State pensions and not declaring that additional income on an annual tax return, it would help if this were taxed at source rather than paid out gross.
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Pension details are reported to Revenue and I think JSB. I don't know about other benefits.

I don't think DEASP has the wherewithal to tax benefits. Besides what tax rate would apply. Taking other income into account, some benefits would be taxable at the higher rate.
 
Perhaps others more knowledgable could expand on this point.

Mr X has an occupational pension and a state pension based on contributions, he pays tax on the occupational pension and has done so from his retirement at aged 60, now aged 70 he has had the state pension paid gross to him since he reached state retirement age.

My question, Mr X has never done a tax return, he is taxed on his occupational pension, he sees the state pension as his to enjoy after a lifetime of paying stamps, the reality is income tax is payable by him on the state pension but he does no tax return and does not plan to.

Are these people caught by the system in all cases to pay their tax on their contributed state pension income once over the minimum income threshold.
 
Palerider said:
Perhaps others more knowledgable could expand on this point.

Mr X has an occupational pension and a state pension based on contributions, he pays tax on the occupational pension and has done so from his retirement at aged 60, now aged 70 he has had the state pension paid gross to him since he reached state retirement age.

My question, Mr X has never done a tax return, he is taxed on his occupational pension, he sees the state pension as his to enjoy after a lifetime of paying stamps, the reality is income tax is payable by him on the state pension but he does no tax return and does not plan to.

Are these people caught by the system in all cases to pay their tax on their contributed state pension income once over the minimum income threshold.
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Maybe I'm being naive, but I would have thought/expected that Mr X's credits/tax band would automatically be reduced to take account of his State pension?
 
The taxpayer qualifies for tax credits based on circumstances, eg married or single and are not reduced, it is a full if modest credit.

Unless somebody indicates otherwise there appears to be a disconnect with this payment, perhaps other state payments are also available without the required taxation applying automatically.
 
Pensions are reported to Revenue by the DEASP. This has been the position for a number of years.
 
Purple,

I agree that some benefits and tax reliefs given to over 65s are too generous.

I think your point is that there isnt enough insurance in the Irish PRSI system. I agree.
 
Protocol said:
Purple,

I agree that some benefits and tax reliefs given to over 65s are too generous.

I think your point is that there isnt enough insurance in the Irish PRSI system. I agree.
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Yes, it's not a Social Insurance system; it's just welfare.

I don't understand why a refundable tax credit system cannot be used. Simply put it means that if your income is too low to use up your tax credits (based on a 39 hour week) then the unused credits are refunded (paid) to the person in question.
With aa system like that pensions, child benefit, welfare, disability allowance etc can all be run through Revenue. That will result in higher tax compliance, a reduction in administrative cost to the Department of Social Protection and better data available to the Government to set and implement policy. I know that this is a right wing idea as it is shared by Social Justice Ireland.
 
Was there not a bit of a kerfuffle about 3 years ago when the Rev Comm announced they were targeting OAP's with private pensions as they hadn't been filing tax returns declaring their state pension? And so thousands would have a tax liability going back years.
The Politicians came out fighting for the OAP's telling the Rev Comm to back off....and then everything went quiet
 
Purple said:
With aa system like that pensions, child benefit, welfare, disability allowance etc can all be run through Revenue.
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Refundable tax credits, such as the Earned Income Credit could assist the lower paid.

As for the benefits mentioned above, refundable tax credits are claimed at the end of the tax year. How would that assist people during the year.

In addition, Revenue staff would have to be considerably beefed up in order to handle hundred of thousands of additional claims.
 
Sophrosyne said:
Refundable tax credits, such as the Earned Income Credit could assist the lower paid.

As for the benefits mentioned above, refundable tax credits are claimed at the end of the tax year. How would that assist people during the year.

In addition, Revenue staff would have to be considerably beefed up in order to handle hundred of thousands of additional claims.
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I'm no expert on taxation but I'm sure it is not beyond the ability of human endeavour to come up with a way of running it through the PAYE tax and welfare systems so that it can be done weekly or monthly.
 
Purple said:
I'm no expert on taxation but I'm sure it is not beyond the ability of human endeavour to come up with a way of running it through the PAYE tax and welfare systems so that it can be done weekly or monthly.
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Because of income fluctuations during the year.

If the credits were incorrectly applied due to income fluctuations during the year they would have to be repaid by the recipient.

For instance, let's say at the beginning of the year only one spouse is working and his or her income is below the threshold. He or she would receive refundable credits on the pay date. But if the other spouse became employed during the year and earned enough to bring the couple over the threshold, the credits already given would have to be repaid to Revenue.

That's just one example of how income can fluctuate.
 
Sophrosyne said:
Because of income fluctuations during the year.

If the credits were incorrectly applied due to income fluctuations during the year they would have to be repaid by the recipient.

For instance, let's say at the beginning of the year only one spouse is working and his or her income is below the threshold. He or she would receive refundable credits on the pay date. But if the other spouse became employed during the year and earned enough to bring the couple over the threshold, the credits already given would have to be repaid to Revenue.

That's just one example of how income can fluctuate.
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Again, I'm sure there is some way of doing it.
In the case you give tax free allowances are managed between spouses. Is it beyond the bounds of possibility that the same could be done here?
Even if the refund, or payment, is made at the end of the tax year it would be better than what we have now.
So, your tax credit (allowance) is increased for each child you have. If you don't use it you get a refund at the end of the year. If you are on welfare you get it each week. If you get a job you come off welfare and the credit is applied.
 
Purple,

FIS, now re-named the Working Family Payment, is a type of refundable tax credit.
 
Palerider said:
How many people are receiving State pensions and not declaring that additional income on an annual tax return, it would help if this were taxed at source rather than paid out gross.
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From 2012
https://www.irishexaminer.com/irela...ace-huge-tax-bills-due-to-blunder-179242.html
UP to 115,000 old-age pensioners face paying thousands of euro in unpaid taxes as a result of a blunder by the Revenue Commissioners....
Individual pensioners will have tax liabilities of several thousand euro as a result of the blunder, which resulted in Revenue being unaware and having “no record” of tens of thousands of people receiving the state, transition, widow’s/widower’s/surviving civil partner’s and invalidity pensions.

In the letters, Revenue told pensioners of changes to their tax credits for this year and last year which will result in an increase in tax to be paid and tax owed by many pensioners.
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I remember some noise about this but then it went quiet. Were Rev Comm told to let it slide?
 
Protocol said:
Purple,

FIS, now re-named the Working Family Payment, is a type of refundable tax credit.
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Sure, but the point of joining it all up is to reduce the admin overhead and things join up for data collection and analysis.
 
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