Edwin Gauci (‘Reduce the tax for pensioners’, June 27) rightly suggested that pensioners should benefit from double the present tax-free income ceilings and from exemption of the 15 per cent tax on their interests and investments. Doing that would be an effective way to partially compensate them for pension anomalies and to immediately improve their living conditions.

In contrast, the introduction of pension reforms may have to be staggered over a number of years. Obviously, alternative revenue sources have to be found for this reduction in taxes but, then, have not the national insurance contributions been also used for other public expenditure for years?

Without waiting for second and third pillar pensions, not a few pensioners have invested their already-taxed savings also in shares to supplement their pensions with the dividends. However, for the past two years, the dividends from shares, exceeding a certain amount, have been taxed at a hefty 35 per cent. At the same time, the highest tax rate on earned income was lowered to 25 per cent.

Shares help enterprises to develop and create jobs and to increase government revenue. However, high tax rates can be a disincentive to investment while lower taxes are likely to stimulate economic growth.

Therefore, the heavy 35 per cent tax levied on the dividends from shares is anomalous and needs to be quickly removed, first of all for pensioners.

It is hoped that all MPs will press for the implementation of these suggestions in the next Budget to help both the pensioners and the economy.

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