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IT’S THE MUCH-HATED tax that just won’t go away: the Universal Social Charge (USC).
Brought in by the late Finance Minister Brian Lenihan in 2011, we were assured at the height of the economic crisis that it would only be a temporary measure.
However, while Fine Gael has made promises to abolish the charge if re-elected, the party has recently been accused of ‘backtracking’ on this key issue.
Earlier this month Finance Minister Michael Noonan said that higher earners will be hit with new levies to “clawback” some of the benefits of the abolition of the USC.
Meanwhile, in a statement last night the Labour party said that it will abolish USC on the first €72,000 of individual income.
Costing
When questioned in the Dáil about the cost of abolishing the charge on incomes below €80,000, Noonan said:
The estimated first and full year cost of increasing the USC exemption threshold from €13,000 to €80,000 is in the order of €1,584 million and €2,148 million respectively.
“This costing assumes that the current USC rates and bands as set out in Budget 2016 remain in place for those earning in excess of €80,000 per annum.
“These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.”
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This gov says the choice is spend it on improving public services or cut taxes. They keep it but always fall short on delivering the services or waste it. So I’ll take the tax cuts until we get capable politicians who can do a proper job.
Can someone please espalier the difference between “first” and “full year” costs? If the measure is adopted on 01 Janin any given year, why is it cheaper the first year?
No problem.
“espalier”: a shrub whose branches are trained to grow flat against a wall, supported on a lattice.
I’d say keep USB, funnel the money into infrastructure
Recession is over so USC should be abolished as it was only ever meant as a temporary fix. Do as promised and get rid of it.
What tax do you replace it with or alternatively what services are they going to reduce,we are still borrowing money for government running costs.The recession is over,economies are cyclical and the time line between recessions is getting shorter.The US,UK China are all slowing down,Europe has never really left recession mode.Our recovery is export led which means it’s only a matter of time before economy starts slowing and don’t forget we still owe billions which we are paying back.we have no excuse this time either as a country or individually we should be saving to get through the next downturn but hey we’re Irish we never learn.
Same with public sector pension levy
I forgot I pay that too.
Public sector pensions need to have a fund setup so they can benefit by investment rather than out of annual expenditure. It would take a few years to complete this. Same for civil service.
The raiding of private pension funds took money not only for the five years or so but this money lost is no longer reinvested. So a permanent live paycut.
It would take a generation to establish a PS pension fund and get pay outs.That is why PS pensions are mostly pay as you go throughout the Western World including the UK and U.S
Just my own opinion but for me The current structure of funding public services is bankrupt. Government is only concerned with funding the country through taxes. I could be wrong on this but don’t countries like Canada, Sweden, Finland run some of their own oil industry? We sold our gas for song, fishing off our coast is worth billions. Just two that spring to mind. As long as we have 4 year governments with built in short sightedness and the same advisorys underneath we’ll always end up with the same results. Government structure and thinking needs a radical overhaul, we can’t keep doing the same thing and expecting different results.
But who is going to believe any of these election ‘promises’?
They take away USC n then they will whack us with another tax r levy to recoup it bak. It’s middle to low earners that always suffer in the end
Cliodhna just for your own safety snd benefit, the usc was brought in 2008. Mr lenihan died in 2011
Wrong Eugene it was announced in DEC 2010 and started 1 Jan 2011
It replace the Income tax Levy and the Health levy in 2011.
So Stephen you are right but it is merely semantics.
Correct Income Levy preceded it. They rebranded Income Levy to Universal Social Charge. This was a marketing ploy to make people think that…. 1 everyone was paying it, 2 there was benefit to society and 3 you were deriving benefit directly back from it as it was now a ‘charge’ and not a ‘levy’ or ‘tax’. Crazy if it is abolished as it is an excellent model for fairness and flexibility. By all means reduce taxes but don’t discard the fairest tool you have for taking it. We also still owe about 200bn I think. Have Labour any plans to pay this back or do they just want to spend us back into another recession.
Labour – making promises you can’t / won’t keep is electioneering in politic speak but in the real world it’s called lying. In any case – there will be no Labour when the votes are counted. You had your chance.
Silly statement -since we will not have one party government every party will have to compromise on their policies. “Red line” issues don’t take reality into account. Your comment means that we should have no government after the election.
Madness ANYONE talking about scrapping it.
I think it should remain and maybe reduced below certain income levels.The idea that the good times are back, so let’s scrap it OR get “the rich” to pay the whole thing just underlines the never think things through attitude of the Irish.
Does it not make sense, as an economy, to build up a war chest for the next down turn, which is inevitable, thus insulating the economy and preventing/diminishing the need for future large scale tax increases and/or public spending cuts?
@Mk76. Don’t you think we have sacrificed enough? Have you had a good look at your pay lately? calculated how much you are paying out? it’s not good from where I’m looking.
I don’t disagree about the sacrifice element, but to simply eliminate €2bn + a year is not smart longer term.
We didn’t pay enough tax in the boom times and then get hammered in the bust years, which is completely counterintuitive. But that will continue to happen, until such time as there is a significant amount put aside to insulate the economy.
USC. property tax. water charges. paye. tax and pensions. It’s all money out of our wages. Add it all up for the year and see how much you are paying.Its madness IMO.
Donna common sense says the state should not reduce taxes in bad times. Instead build up reserves which can be used for future event – which there will be.
I don’t think anyone is happy seeing a blending ~40%+ of their income taken, but we clearly weren’t paying enough tax and were too dependent on limited sources of taxation.
So the sentiment of your point will be widely shared, but how is the economy going to be supported if we scrap everything other than income tax?
Ger.I have no problem paying my share. USC was grand until water charge and property tax happened. We shouldn’t be working for nothing. I expect to earn a decent wage for my efforts. I made the sacrifice and now we should get some relief. It’s hard to take when government ministers are not taking the same hit.
Puts the bank bailout figure of €40bn into perspective.
There’s another 20 billion to be invested in anglo. Paying interest now on 8 or 9 I think. NPRD raided for AiB. Plus 10 more borrowed. Add interest. Add allowing banks to write off future profits against taxpayer covered losses. 40 billion no way near it. Plus Nama who bought at highly discounted prices will soon be congratulating themselves for breaking even.
No citizen should be paying a higher percentage of their income than corporations that make millions in profit who can legally get away with paying an effective tax rate of 3%. We as citizens cannot afford to subsidise this corporate welfare anymore. The Paye worker has given enough.
Without those corporations we wouldn’t be PAYE workers, we’d be social welfare recipients or contributors to Her Maj’s coffers. People forget that we’re a wet little island with an insignificant market and not a single road connecting us to Europe.
So we let them away with it Frank in case they leave is it. .Sounds like a toxic relationship.
Corporation tax is not the only tax businesses pay. There’ employerers PRSI which adds about 10% to the cost of each employee. Businesses also pay rates which is also a significant cost to most companies.
Rubbish, Without workers these companies would have no profits. All the capital in the world without workers is useless.
Short sighted CMac , workers are an abundant resource in a dozen cities with populations bigger than Ireland’s
Bewilders, as it’s the most fairest form of taxation. The same percent for everyone. Abolish tax bans altogether and just have a singular tax rate. Pension and Health insurance should be exempt however, with a cap on pension fund to avoid abuse.
Btw: which kicks in at a certain level
I have agree. Everybody earning income (and not just paid employment) should pay a flat low % tax. And by income I include pensions, social welfare, interest, capital gains, inheritance. Abolish the myriad of taxes, tax thresholds, allowances. Some flat and straight forward
Was it Labour’s Pat Rabitte that said you say things before an election just to get elected. .In other words Labour lie to get elected. Why would you believe them when they publicly say they lie to get elected.
Usc brings in more money than lpt and water tax. So just scrap these two instead…
Raise levels of corporationn tax to 15% and take the pressure off consumers.
Chris, No need to. If they paid the current 12.5% it would be enough. Unfortunately, Our government allows some of the wealthiest of them pay an effective tax rate of 3%.
Costs more to collect than what it brings in for IW and 40% of motor tax lost in collection. Not hard to see where savings could be made in fairness.
Unless you have a vested interest. Secure job and pension etc
Why doesn’t he say 1.5billion rather that 1,524 million. Quite bizarre
24 million could help the homeless.
Because, we don’t live in America. Over this side of the Atlantic, a “billion” is a million million.
Not in economic speak Jane.
Sometimes it feels like it when you’re forced to pay someone else’s debt though….
It’s funny how we managed without the USC prior to it being implemented for the bank bailout but now we couldn’t possibly do without it. Without any discernible improvement in services being provided.
Well, if a political party said that they’ll do something if they get elected then it must be true. They’d never go back on their promise.
I have no issues paying tax when I see services been delivered with efficency and quality . However the reality is everyone was to hand over all there wages to the government I am in no doubt all services would be like it is or worse.
They will promise to scrap the USC but just forget to mention that property tax goes up in 2019. You will just pay your taxes by a different method. If we want good public services we have to have taxes to pay for them. Don’t be sheep folks.
Only if your house value goes up , so won’t affect everyone.
Government Resources should never be deployed in either on or off shore Oil Exploration. It’s a risky and expensive business, and investment in this sector is not for the feint hearted.
As a country, all we can expect is realistic licensing revenues from specialist oil and gas Exploration companies wishing to explore our seas, and some payback later on taxes should anything significant be discovered.
But with market price of Oil now at around $30 a barrel, and a worldwide glut in supply, don’t expect many takers for those licences.
The best way for the Government to raise further revenues is to strictly implement the existing 12.5% CT rates in the direction of the Multi Nationals, with their European HQ’s in Ireland, making sure to pluck a large handful of feathers off the intellectual property / royalty revenue goose, before flight to the real tax havens.
Moany joan has posters around Castleknock about some public meeting,The headline states something like standing up and protecting working class families I was telling a friend about it and he just laughed,Standing up for working class families yet have no problem having the rotund horrible man from Limerick rob from our pensions. Pensions that we have no access till we retire,Yet the money robbed from the pensions was used for joans scambridge.
Would anybody have any idea how my use has increased yet I’m on the same wage as last year ?
…so, double it for those earning over €80K, simple.
@Jane, why should the higher earners pay more.. They worked very hard to get to a salary like that.. Countless hours of extra study and exams etc, while the lower paid workers did nothing to improve.. This attitude of punishing them is what has pushed most of the skilled workers out of Ireland, never to return.
Where they not there when it was brought in??? What do they take us for?
€4 Billion spent on Irish annually so the cost of USC is very little compared to that.
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