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SIMPLIFYING THE TAXATION OF PENSIONS
Author(s) -
Booth Philip,
Cooper Deborah
Publication year - 2003
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.t01-1-00004
Subject(s) - pension , revenue , work (physics) , tax revenue , economics , coherence (philosophical gambling strategy) , tax reform , business , public economics , law and economics , finance , actuarial science , engineering , mechanical engineering , physics , quantum mechanics
The current tax framework for pensions is now economically incoherent. The changes in the 1997 Budget made it more so. Changes can be made to restore its coherence. However, any attempt to remove tax relief at the higher rate, as has been discussed by academics and commentators recently, would be wrong in principle and could not work in practice. The pension fund tax codes and the rules for annuitisation should also be simplified significantly. The Inland Revenue no longer needs to design detailed rules to prevent people ‘abusing’ tax relief. Such detailed rules are extremely costly to implement and, because they make the whole system impenetrable, stop people from using pension vehicles for saving.