‘Bonkers’ hit on pensions of 23,000 women
Donohoe refuses to fix anomaly created by FG-Labour government
A PENSION anomaly that means thousands of women are losing out on payments will not be fixed any time soon – because it would cost too much to do, the Finance Minister admitted.
Paschal Donohoe said it is “bonkers and unbelievable” that women are losing out on pension payments due to a recent change in the rules. Thousands of women are getting smaller pensions because they left the workforce before 1994 to care for children. Others are taking a pensions hit because they once had a summer job or had part-time work for a while.
It is estimated 23,000 women have been hit with lower payments due to changes to State pension eligibility rules made by then-social protection minister Joan Burton in 2012.
Retired women are losing more than €1,500 a year on average, according to calculations by advocacy group Age Action.
The rule change also means the women affected will not get the full €5 increase in the State pension due from the end of March. Mr Donohoe admitted it was wrong that women were being affected in this way. However, he said: “The advice I have available to me is if we were to look to try to rectify this issue in one move in a single Budget, it would cost hundreds of millions of euro for me to do.”
National Women’s Council director Orla O’Connor said she was disappointed the issue was not addressed in the Budget.
Meanwhile, Mr Donohoe is facing a backlash after it was confirmed the hike in commercial stamp duty from 2pc to 6pc will apply to the sale of farmland. Farm organisations believe the Government has failed to factor in the impact it will have on rural Ireland.
FINANCE Minister Paschal Donohoe is facing a major backlash after it was confirmed the massive hike to commercial stamp duty will apply to the sale of farmland.
Farm organisations and Opposition politicians believe the Government has failed to factor in the huge impact the Budget move will have on rural Ireland.
However, Mr Donohoe has insisted there is “no intention of making anybody collateral damage”.
In his Budget, the minister raised the stamp duty on commercial land transactions from 2pc to 6pc in a bid to raise
€376m that will be used to fund social welfare increases and income tax reductions.
There was initial confusion within Government as to whether this would directly affect the sale of farmland, but Mr Donohoe has confirmed it will, with the exception of inter-family sales and where the buyer is under 35 years of age.
As a result, Kildare-based auctioneer Paddy Jordan told the Irish Independent the “vast majority” of farms sold will now be subject to the new higher rate of tax.
“We see some young farmers buying who will qualify for the
0pc relief and carry out valuations for inter-family transactions, but the vast majority of land sales are to people who do not qualify for such reliefs,” he said.
Mr Jordan sold a large farm for more than €1.3m on Budget day.
“The deal was signed before the Budget was passed and the buyer’s stamp duty will be over €20,000, but if the farmer had bought the land after the Budget, he would be facing a stamp duty bill in excess of
€80,000,” Mr Jordan said. Kilkenny-based auctioneer Joe Coogan said only one-infive farms sold is to people who will be exempt from paying the increased stamp duty.
Independent TD Michael Fitzmaurice has claimed the move will cost farmers €12m. The Roscommon East/Galway TD said he had been inundated with queries. He also questioned what will happen to transactions that haven’t yet been completed.
“I’ve had farmers on to me that are now facing an extra bill of €12,000 to €14,000 from the stamp duty increase,” he said.
Farming organisation Irish Creamery Milk Suppliers Association (ICMSA) said the imposition of a 6pc rate on farmland sales was a seriously retrograde step that would affect very negatively those small and medium-sized farmers trying to buy land to improve the viability of their farms into the future.
ICMSA president John Comer said the decision to impose such a charge on a family farm buying even a small piece of land stands in very sharp contrast to the concession given to property developers whereby a developer will get a refund of the stamp duty if development begins within 30 months.
“We’ve a situation where a developer spending millions buying land – and likely to make very substantial profits from house building – will qualify for a refund, while a family farm perhaps buying a small piece of land and taking out a loan over maybe 20 years to pay for the land will be hit with a 6pc stamp duty rate with absolutely no refunds.”
Meanwhile, questions have been raised about the assumption that the stamp duty change will actually bring in €376m
next year. Department of Finance sources told the Irish Independent the figure is “conservative”.
But John Heffernan, tax partner at EY Ireland, said: “Property transactions in the region of €9.4bn would be required in 2018 to produce a yield at this level. Commercial real estate investment in Ireland in 2016 was €4.5bn, less than half of the level of investment that would need to be made to reach that projection. Given there was already significant investment in real estate in 2016, to assume a doubling of that level would be over-optimistic and unsustainable.”