COUNCILLOR Rod Hills attributes the £400,000 additional funding he needs to raise from York council tax payers to protect the pensions of his staff, to the 'general slump in investment returns' (Letters, February 5).

Soon after election in 1997, New Labour abolished the dividend tax credit which, put simply, means the returns earned by pension funds are now taxed whereas previously they were allowed to accumulate tax free. Therefore more money has to be put in to maintain the benefits required. Perhaps Rod Hills could find out from the scheme's actuaries how much of the shortfall is attributable to this 'stealth tax' and forward the figure to central Government, pointing out that York council tax payers are having to pay more into the pensions of 6,000 other people while making up shortfalls for their own provision - from diminished returns on their own investments.

K Wellburn,

The Village,

Strensall, York.

...I AM one of the thousands of pensioners paying council tax who, in the past year, have suffered quite a cut in my income because of lower interest rates on savings.

I object to my income being cut even further by having to contribute nearly £70 towards pensions for 6,000 council staff. They should not have to be helped out by pensioners.

W R Jackson,

New Road,

Escrick,

York.

...SO it's the time of year for city council Liberal Democrat leader Coun Steve Galloway to posture and criticise the Labour group who are struggling with the council's budget (January 30). As usual, while no scare story will be left unreported, there will be an absence of any thought-out alternative proposals from the Lib Dems.

Perhaps Coun Galloway would care to add at least a couple of other places to his 'visit list': the Lib Dem-controlled council in South Gloucester where his colleagues there are proposing a council tax rise of 12.4 per cent, or Lib Dem-run Sheffield City Council which is seeking to cut welfare rights advice centres serving the poorest parts of the city.

Alexander Fraser,

Millfield Road,

York.

Updated: 13:52 Saturday, February 09, 2002