Taxing the bran-tub
ALSO in the Chancellor's post is a letter from Lord Vinson, calculated to strike terror into the next board of directors who plan to put their hands into their com- pany's bran-tub and pull out some nice plummy pensions. They should note that. Lord Vinson, who likes to describe himself as an inventor (he was one of the inventors of personal portable pensions) writes not from some haunt of poverty or envy, but from the Centre for Policy Studies, the think tank founded by the Prime Minister. He heads its group which fosters wider share ownership — which to his mind means owning shares directly, and not through the mist of a pension fund. He wants a ceiling on pension tax relief, like the ceiling on mortgage tax relief. The first £3,000 a year of contributions, he suggests, should be tax free. Above that a company could contribute as much as it liked, but the contribution would be taxed, like a salary, as the beneficiary's income. 'It would end the very real abuse of directors raising their salary just before retirement in order to enhance their pensions.' What should the Chancellor do with the revenue he would save? Give some to the personal shareholder, says Lord Vinson. Raise the limit on Personal Equity Plans to £10,000 (making them an economic proposition to their managers) and don't tax capital gains if the money is put back into shares. Individuals' gains are now taxed at up to 40 per cent while institutions' gains are tax free, which is a funny way to foster wider share ownership.
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