Taxing granny?

It's no surprise that the Labour Party has jumped on the Chancellor's decision in this week's Budget to phase out higher personal allowances (the point at which you start paying income tax) for pensioners, dubbing it a "granny tax".

I'm not quite sure of the rationale behind higher personal allowances for pensioners.  There are obviously rich as well as poor pensioners just as there are highly paid as well as low paid workers.  While poorer workers and poorer pensioners don't pay income tax, they do pay far more proportionately in taxes and duty on food, petrol, heating and beer (a mixture of mild and old ale is nicknamed "granny" incidentally).

The way to help poor pensioners and workers is to raise personal allowances for everyone, increase the minimum wage, link pensions to wages and phase out indirect taxes in favour of a progressive income tax.

Paying for our pensions

The announcement by the Government that it will not force public sector workers within ten years of retirement to work longer to get their pensions is clearly an attempt to divide both trade unions and their members ahead of the planned strike on the issue at the end of this month.

We have been here before: last time the Government attacked public sector pensions, in 2005, the unions accepted a deal whereby existing staff would still be able to retire on a full pension at 60 while new staff would have to work to 65.  The folly of allowing that two-tier workforce to be created is now becoming clear.

The Government's plan for public sector pensions is based on three lies:

1. everyone is living longer

Life expectancy overall may have increased but it still varies widely, both between men and women and more importantly by class: poorer people, including low-paid manual and admin workers in the public sector, die younger.

2.  public sector pensions are too high

As a member of the Civil Service Pension Scheme who worked in the admin grades for ten years, I can vouch for the fact that given it's based on your earnings, low pay means a low pension for most public sector workers.

3.  the money isn't there to pay for them

This is part of the broader argument that the Government has to slash public services, jobs and benefits and hold down wages and pensions in order to pay off the deficit.  That is a political decision rather than an unavoidable choice, as is the decision as to whether or not we tax the enormous wealth of the City and the super rich in order to pay for decent public services, wages, pensions and benefits.