Current Petitions

Yes. Thank you very much for bringing this item forward. I appreciate that the committee has a lot on its agenda today.I will start by commenting on the minister's response to the committee, dated 9 August. I welcome the fact that payments have now begun, but paragraph 1 in the minister's response says that he has written to the Inland Revenue on taxation matters. Lump sum payments from pension funds are normally tax free, yet, in this case, 22 per cent tax has been deducted at source from all payments to all pensioners. It is up to the individual pensioners to try to claim it back from the Inland Revenue if their other income is below the taxable level. The pensioners' counterparts south of the border received tax-free lump sum payments. Because of that, the pensioners do not see why they should be subject to tax.As members can see from the letter, the minister still awaits a response from the Inland Revenue. I therefore feel that the committee should ask the minister for a copy of that response.Paragraph 2 of the minister's response contains nothing new or unexpected. The £8 million was being negotiated anyway. The information is welcome but it is nothing new. We had that information before the summer recess. The Treasury is still intent on pocketing about £50 million from the surplus, as well as 35 per cent in corporation tax and 22 per cent in income tax. In other words, under the existing proposals, the Treasury will get three bites at the cherry. It will get something like 60 per cent of the total gross surplus—the lion's share. The pensioners will receive only 40 per cent so, again, there is an outstanding grievance.I want to comment briefly on paragraph 3 in the minister's response. I welcome the change of the date of eligibility. However, there is some confusion because, in the original document that the Scottish Executive sent to potential beneficiaries, 7 June 2002 was stated as the date of eligibility. However, a commitment was given by the Chancellor of the Exchequer and by the previous First Minister on 18 December 2000—I remember the date distinctly as it was during the Falkirk West by-election—and was confirmed to interested MSPs by Executive officials at a subsequent briefing. The date of eligibility of 18 December 2000 is of great assistance to people who might have lost a relative in the intervening period. In other words, if a male pensioner has died since 18 December 2000, their widow is entitled to 100 per cent of what the pensioner would have been entitled to if they were still alive rather than 50 per cent. I welcome the fact that the minister has clarified that point, but he should make more effort to inform all the potential beneficiaries of the change of the date of eligibility.I ask the committee not to close the matter at this stage and to ask the minister to keep us informed of any further response from the Inland Revenue. Am I right in thinking that, before the summer recess, you considered the possibility of inviting representatives of the Inland Revenue to appear before the committee or of communicating with the Inland Revenue directly?

I place on record my gratitude to the committee and I am sure that the pensioners would also like to do so. However, although considerable progress has been made by the Public Petitions Committee, we do not consider the matter to be closed.

I do not see how the Inland Revenue can get away with making the lump sum taxable at 22 per cent. That is not standard form and does not happen in relation to any company or governmental organisation of which we have heard. I do not think that the Inland Revenue's pension provisions allow for a 22 per cent heist from a lump sum. It is unheard of. Has a new rule been introduced?

Indeed, should we ask whether a Treasury minister will appear before the committee?

It seems to have been Andy Kerr, the Minister for Finance and Public Services, who was involved in negotiations with the Treasury. It might be better to write to him rather than to Lewis Macdonald, the Deputy Minister for Enterprise, Transport and Lifelong Learning, who has dealt with other aspects of the matter.