Fine Gael TD for Galway West & Mayo South

PQ No. 74 – 27th November – Pension Levy Proceeds and Abolition

To ask the Minister for Finance if it is under consideration or if it will be considered, as a mechanism for reducing taxation and giving back to taxpayers, to return all or portions of the pension levy, a levy which was introduced to fund job creation initiatives, particularly in the context of the improving financial and economic position of the State; and if he will make a statement on the matter.



The original 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 ended this year. The additional levy on pension funds at 0.15% which I introduced for 2014 and 2015 mainly to help continue to fund Jobs Initiative will also end after next year.

The position is that the equivalent value of all of the money raised from the stamp duty levy has been used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and create new jobs.  These include expenditure measures such as the Jobbridge and the Springboard schemes, as well as a number of tax and PRSI incentives such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the halving of the lower employer PRSI rate.

The reduced VAT rate of 9% on tourism and certain other services was one of the very significant and successful measures introduced by the Jobs Initiative. It was due to end in 2013. In my Budget 2014 speech I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The 9% VAT rate has helped to create thousands of new jobs as well as protecting existing jobs. Since the Budget announcement about the reduction in the Air Travel Tax, airlines have announced the opening up of new routes resulting in significant increases in passenger numbers with the associated increase in tourism activity and employment.

While the pension fund levies have ceased and will be ceased as I have already outlined, I have no plans to repay some or all of the pension fund levy tax collected as proposed in the question. The value of the funds raised by way of the levy have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State to which the Deputy refers. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons for the levy (pension scheme trustees and other persons with responsibility for the management of pension scheme or pension plan assets) will benefit from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the income tax burden on low and middle income earners. It is in this prospective way that the benefits of an improving fiscal and economic position are usually passed on.