Dáil Éireann Debate, Tuesday - 4 December 2012
152. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing the universal social charge by 3% on income in excess of €100,000; and what the impact would be on the average effective tax rate of earners between €100,000 and €200,000. [54083/12]
View answerI am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, from extending the additional universal social charge of 3%, which is currently applicable to self-employed income in excess of €100,000, to all income earners at this level of income would be of the order of €71 million. The Universal Social Charge is an individualised charge and as such, the estimate of yield is based on individual incomes of more than €100,000. The estimated yield is based on confining the extension of the 3% rate to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000.
The effect of the suggested change on effective tax rates of income tax and USC would vary depending on the income level, ranging from increases of approximately 0.14% at €105,000 to 1.5% at €200,000. The overall average increase in the effective rate for the income range €100,000 to €200,000 is ultimately decided by the distribution of income earner numbers in the range. As the population distribution is predominantly skewed towards the lower end of that income range the overall average increase in the effective rate emerges as 0.3%. The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.
