Could the pensions levy have been prevented?

The announcement by Revenue that 115,000 pensioners have been underpaying their tax will come as a shock to many. The reason apparently is because the Revenue didn’t know they were in receipt of Social Welfare pensions and therefore hadn’t factored this extra income into their tax allowances.

 

The Revenue press release on this matter indicates that the tax payable could exceed €4,000 for a single person or €8,000 for a married person. Taking the lower figure as an average it would seem that the tax foregone could amount to €460m – about the amount collected by the pension levy. Its begs the question whether or not the pensions levy could have been prevented?

 

Amazingly there is no suggestion that previous underpayments will be collected. The Revenue's focus will be on getting it right from now on. Other pensioners who paid their tax in full and are now paying a pension levy on top can only look with envy at their peers who have neither exposure.