Dáil Éireann Debate, Thursday - 18 July 2013
73. Deputy Ciara Conway asked the Minister for Finance the reason a non-means-tested State pension is fully exempt from the universal social charge; if the non-means-tested State pension was subject to the USC, the amount it would realise for the Exchequer; and if he will make a statement on the matter. [35989/13]
View answerThe position is that the Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. Payments that are made under the Social Welfare Acts are and have always been specifically excluded from liability to USC. Accordingly, all State contributory and non-contributory pensions are exempt from the charge. I would also draw the Deputy’s attention to the fact that certain payments, which are of a similar character to social welfare payments, are also exempt from universal social charge. A list of such payments is included at Appendix A, page 49, of the FAQs relating to the universal social charge published by the Revenue Commissioners and available at http://www.revenue.ie/en/tax/usc/universal-social-charge-faqs.pdf.
To estimate the potential yield from applying the USC to non-means tested State Pensions i.e. the contributory State Pension and the State Pension (Transition) it would be necessary to identify certain details in respect of each recipient of social protection payments such as the individual amount of these payments received, the amount of any other income potentially liable to USC, the age of each individual and whether there was an entitlement to a medical card etc. This information would be essential to determine what rate of USC would apply at an individual level. It is possible that in many cases the rate would be low.
I am informed by the Revenue Commissioners that as they do hold or have access to the required information set out above, there is no basis on which an estimate of the yield from the change mentioned in the question could be compiled. However, by way of illustration, if for example, a 1 per cent levy was imposed on social protection contributory State Pensions and the State Pension (Transition) the full year yield to the Exchequer would be €41 million on the basis that the estimated provision for such payments in 2013 is approximately €4.1 billion. The estimate of Exchequer yield assumes that there is no exemption threshold, allowance or personal reliefs that could be used to offset against the levy.
