Poor response to second-home tax

I blogged earlier this month here about the €200 tax on second homes. Today is the final day for payment of this tax. According to RTE, only €15 million has been collected to date. That's 75,000 houses out of a potential 200,000.

Anyone eligible who doesn't pay this faces penalties.

New style of pension tax relief

Credit where it's due to the Commission on Taxation for taking a long-term view on reform of pensions legislation, rather than concentrating on how money could be saved in the short term. Many of their proposals on pensions are largely focused on making pension planning more attractive, rather than cutting costs. Given the changing demographics of our country, this is very welcome, especially since short-term cost-cutting might have been an easier sell to the Government in the current climate.

One of their more interesting proposals is that the idea of "tax relief" on pensions should be replaced with a more transparent system, whereby for every €1.60 an individual contributes to a pension plan, the Government adds €1.00. For the first five years, the Government would match contributions €1.00 for €1.00.

This system would deal with the age-old perceived inequality that our current system offers more benefit to higher-rate taxpayers than to those on the lower rate. It is the equivalent of offering 50% tax relief for five years, then 38% relief thereafter. To take an example of a pension plan that exists for 25 years, that's the equivalent of an average rate of tax relief of over 40%. This is lower than what many high rate taxpayers currently enjoy but higher than what low rate taxpayers are currently offered.

Perhaps more importantly, it's simple. The idea of the Government putting money into your pension plan directly somehow sounds more appealing than the current tax relief system, even though tax relief is also the Government adding money to your pension plan - just expressed in a different way.

Let's hope Brian Lenihan pushes this one through. Radical pensions reform can tend to take an age to implement, as I've said before, even though Charlie McCreevy proved that it doesn't have to.

The pensions section of the Commission's report can be read here.

Don't forget to pay the €200 levy on second properties

The Local Government (Charges) Act 2009 introduces a €200 annual charge on non principal private residences, payable by the owners to the local authority in whose area the property concerned is located.

The final date of payment of this charge is the end of this month, i.e. 30th September 2009. It's your responsibility to pay this charge - you won't be receiving any reminders in the post.

Full details (including how to pay it) can be obtained at http://www.nppr.ie