Sunday, April 01, 2007

Pensions theft

The Tories are calling for an investigation into the theft by Brown on pensions:

The chancellor is facing calls from the Tories for an inquiry into the pensions gap after claims that he ignored warnings of a funding shortfall.
Confidential Treasury papers have shown he was told in advance of scrapping dividend tax in July 1997 that it could wipe £75bn from pension fund values.

During the last term of Conservative government, one of their MPs wrote a policy proposal which called for the elimination tax relief on pensions* so they should know:
This implies the abolition of at least thirty current forms of relief from Income Tax, including mortgage interest relief, relief on employee’s contributions to occupational and personal pensions, reliefs for TESSAs, PEPs and profit related pay, National Savings certificates,employee share schemes and charitable giving.

about which he says

Furthermore, the working assumptions of such a measure of tax reform do not allow for any other changes to the tax system, such as the elimination of tax relief on employer’s contributions to pension schemes and on investment income within pension funds. If these changes were added to the overall package of reform, it would have yielded an extra £7400 million revenue in 1994–95. Any plausible updating of this figure to 1996–97 levels would probably bring it up to at
least £8000 million, which means that in those circumstances the actual first year cost to the Exchequer would be somewhere between £12,000 million and £4000 million and almost certainly at the lower end of that range

So there we go.

*Single Rate Tax: The path to real simplicity by Nigel Foreman MP

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