Pensions tax relief should be slashed for top earners, TUC argues

Date: 14th September 2009

The head of the Trades Union Congress (TUC) has urged the government to take the 'bold' step of scrapping tax relief on pensions for the UK's top earners.

Speaking ahead of this week's TUC conference, Brendan Barber argued that not only would such a taxation policy address important social justice issues, but it would also help to boost the economy and reduce the need for spending cuts within the public services.

"Issues like the tax relief on higher rate [taxpayers'] pensions – this is preferential treatment, giving a massive boon to better off people at a huge cost to the public purse, a cost that's equivalent to twice the cost of the overall public sector pensions that some of our critics keep saying is unaffordable," he told the Observer.

Mr Barber again expressed his belief that the best means of addressing the UK deficit is to raise taxes rather than make cuts.

He added, however, that such an approach should be based on "fairness", with those best able to pay expected to contribute a larger share.

The Confederation of British Industry (CBI) recently warned that plans to limit pensions tax relief will do little to encourage employers to boost their worker benefits.