Dublin Opinion

Gilmore is very strong on the Pension Levy in the Dail today:

Mr Gilmore said the anger felt by striking and protesting workers was “understandable” when the lowest paid worker in a hospital was having his or her wages cut and hospital consultants were to get a major increase.

“One of the things the Taoiseach tells us repeatedly is that the economic crisis we are experiencing is largely due to international factors which are outside the control of the Government. Some of that is true, but there are some things that are within our control. One of these is the state of our own country’s industrial relations,” he said.

Mr Gilmore suggested the Taoiseach suspend the passage of the controversial pension levy legislation. He said the Government should have discussions with the trade unions and “at least make some adjustments to the pension levy to make it more fair”.

“Everybody in this House understands there are some things that are manifestly unfair, inconsistent and anomalous in the pension levy arrangement.

“I ask him at least to attempt to reach agreement on those issues, change the proposal before the legislation is enacted and the door is closed on it, and avoid the strikes which are perfectly avoidable if discussions take place with the trade unions representing the workers concerned.”

It is not only that the lowest paid worker in a hospital is having his or her wages cut while hospital consultants get a major increase – which flies in the face of calls for cuts in wages across ALL sectors of the economy. It is that even without that increase the consultant has to pay proportionately less than the lower paid hospital porter.

All this is explained in an excellent document posted on the Tasc site and written by Gerard Hughes and Jim Stewart of the Pension Policy Research Group in TCD.

The inequitable nature of the tax arrangements for pension contributions is clearly illustrated by the kink in the net levy series at incomes lying between €35,000 and €75,000. Many workers with an income below €35,000 will pay more as a percentage of their gross income than higher paid workers earning between €35,000 and €75,000. The kink is due to the fact that at €36,000 the marginal tax rate increases from 20% to 41%.

We estimate from a Department of Finance classification of 300,000 public service workers by income range that many of the 92,000 lower paid workers (31% of the total) in receipt of incomes of up to €35,000 will make a higher net payment than 177,000 workers (59% of the total) whose incomes fall in the range €35,000 to €75,000.

For the remaining 31,000 highest paid workers (10% of the total) with incomes in the range €75,000 to €300,000 the net levy as a percentage of income will be only a little more than for someone with an income of €35,000.

I discuss it in a little more detail over on Irish Left Review.