Paisley hits out at ‘granny tax’

North Antrim MP Ian Paisley has voiced his ‘extreme dissatisfaction’ towards the government’s measures to raise money from the pockets of pensioners, especially the effects they will have on those living in Northern Ireland who will lose even more than the rest of the UK according to new statistics.

Monday, 9th April 2012, 9:13 am

Speaking this week he has raised serious questions over the introduction of the “Granny Tax” in the Chancellor’s recent budget and also over their decision to change the measurement of inflation on public sector Pensions from the Retail Price Index (RPI) to the Consumer Price Index (CPI) in the last year.

Currently income tax is not charged for Pensioners on any earnings up to £10,500. The government however is now freezing this tax-free allowance for the foreseeable future and is also scrapping it for anyone who will not be of pension age in April 2013.

UK wide more than 4 million people will be £83 worse off by 2014 whilst 360,000 over 65 will lose £285. In scrapping this allowance for new pensioners and freezing it for existing the government will raise £3.5 billion from the pockets of 4.4 million people. 700,000 pensioners turning 65 next year will take the biggest hit and will miss out on £323 a year because of the Chancellor’s decision.

However the National Federation of Occupational Pensioners (NFOP) has released some extremely worrying statistics today in relation to Northern Ireland, who’s pensioners are hit harder because of lower incomes and a high reliance on oil.

Overall we have a total of 300,000 pensioners with 100,000 of these being affected by the “Granny Tax”. Calculating through the tax differential, those under 75 in Northern Ireland will lose £11.70 per week whilst those over 75 will lose £12.20. Not only is this a colossal figure but it also shows the oldest in our society being taxed more than those slightly younger and how Northern Ireland are the biggest losers.

Michael Monaghan, who is the NFOP’s regional organiser for Northern Ireland, and also the Chair of the Northern Ireland Pensioner’s Parliament, said this:

“Pensioners are absolutely appalled by these changes – the freeze of age-related tax allowance in particular feels like a real attack on our incomes, on top of the change to CPI, which has left most of us worse off.

“Although it affects all pensioners in the UK, Northern Ireland is worse affected. This is because, in general, pensioners here are on lower incomes and because of our high reliance on oil. Seventy-one percent of homes in NI rely on oil – the price of which has increased by the RPI.

“The Government has tried to explain these changes away as ‘simplification’ but in fact it is picking the pockets of pensioners. We are facing a serious loss of income.”

It has also been recently revealed that his tax decision is actually breaking a promise to Pensioners that the Coalition government had previously made in 2011 when they published in the Red Book, “for the duration of this Parliament…the age related allowance and other thresholds for older people…will increase by the equivalent of the RPI.”

Paisley said:“We have come to expect from this government to renege on their promises and this is a prime example of the government not being able to honour anything they have previously said. Going back on their statement from the Red Book is only to prey on the most vulnerable in society and to prove the façade and emptiness this government is comprised off.”

“We are talking about people who have worked their whole lives legally paying money through taxation into the state. They do not owe anybody anything. In fact as they have now reached the end of their career and are settling down to retirement, they should expect to be looked after, not to have to fork out more and more in order to recover the government’s budget deficit.

“The tax allowance freeze and subsequent removal for those currently under-64 is nothing short of scandalous. Especially given as these are the pensioners who have not relied on benefits their entire lives, but have worked hard and contributed fairly to society.”

“The change of the measurement of inflation on pensions to CPI from RPI was announced in the June 2010 budget and has been in place since April 2011. Since that time Pensioners in sectors covering civil servants, teachers, NHS employees, local government and others have been receiving an increase of 3.1% in inflation as opposed to 4.6%. It is said that over 15 years a CPI up-rated pension would be worth 17.4% less than one increased by RPI and over 20 years they would be worth 23-25% less.

“In terms of the RPI/CPI change for Northern Ireland, the National Federation of Occupational Pensioners in conjunction with Queen’s University Belfast cannot confirm a definite figure of those affected, but they believe it to be over 250,000 of our 300,000 pensioners. With this change, it is the cumulative effect that is more concerning, as it makes a startling difference over a period of 10 years for example.”

Ian Paisley is calling for everybody to sign the e-petition online entitled “Restoration of Age Related Tax Allowances,” that opposes the freezing and removal of tax allowances for pensioners. If it reaches 100,000 signatures a debate will be called in the House of Commons.