Tax increases cutting further into pensions

The fuel tax increase of 6.7p per litre, an increase of 70p per week for approximately 12 litres.

Alcohol tax of 10p per pint of beer – six pints of beer per week, an increase of 60p.

TRP: increase of 35p per week.

Alcohol: increase of 60p per week.

Petrol: increase of 70p per week.

Total on three items: £1.65.

Personal allowance on tax – no increase.

Pension increase for year is unknown at present, so £1.65 to be deducted from pension.

Can Gavin St Pier please explain to me how the minimum living wage is supposed to be £6.85 per hour and a pensioner must try to live on £5.03 per hour for a 40-hour week.

We have to find £74 extra per year to live.

We may have savings, but interest as it is at the present time means we have to eat into our savings to live.

Please Mr St Pier, give us a thought.

D. G. LE RAY,

Hedgecroft,

Rue Charruee, Vale.

Editor's footnote: Jan Kuttelwascher, deputy Treasury and Resources minister, replies:

I am grateful to you for the opportunity to respond to your reader's letter in respect of the 2016 Budget proposals and, specifically, the impact on pensioners.

If the Treasury and Resources Department had prepared the 2016 Budget on the basis of no changes to taxes and continuing the previous policy of transfers to the Capital Reserve, then there would have been a deficit of £28m. next year. Therefore, to meet the cost of the necessary investment in health and social care services and to balance the budget and 'live within our means', the department is proposing some carefully considered and limited changes to corporate sector taxes, personal taxes and duties.

In response to the useful illustration used by your reader, TRP and duty on fuel will indeed increase as set out. However, due to the proposed changes to the method of charging duty on alcohol, there is no increase in the duty charged on a pint of beer with an Alcohol by Volume of less than 4.9%. Therefore, in this case, your reader's contribution towards the cost of providing health and social care services will be £1.05 per week, not £1.65 as suggested.

Importantly, this will be offset by a proposed increase in the old age pension of £3.42 per week on a full rate single pension, a 1.7% increase.

The Social Security Department has confirmed that the old age pension is intended as a platform for retirement income rather than a replacement for working wages. There is therefore the expectation that it will be added to by a pensioner's occupational or private pension, savings or, where necessary, from supplementary benefit.