The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base. I should point out that it was never intended that the USC would be a temporary measure. It was designed and incorporated in to the Irish taxation system as part of its permanent structure and the revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.
As you may be aware, delivering on a commitment in the Programme for Government, the USC was reviewed by my Department in the lead up to Budget 2012 and the report of that review is available on the Department's website. As a result of the review, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.
Regarding any increase in the rate of USC, I assume that the Deputy is referring to the fact that the previous Government, when they introduced the USC, legislated for an exemption from the top rate of USC for those on medical cards and for those aged over 70. That which applies to medical card holders is due to expire at the end of this year. These individuals are subject to USC at a reduced rate of 4% on their income above €16,016, compared to the general taxpayer who pays at 7% on income over €16,016. In Finance Act 2013, this exemption from the top rate of USC was restricted to those on medical cards and those over 70 who had aggregate income of less than €60,000 per annum. In the absence of legislative change in the next Finance Bill, the exemption from the top rate of USC for qualifying medical card holders would expire. However, individuals who are over 70 and whose aggregate income does not exceed €60,000 would continue to be exempt from the top rate of USC.
I can assure the Deputy that the USC provisions that are due to expire at the end of this year will be subject to a full examination, as part of preparations for the Budget and Finance Bill and will not be allowed to lapse without significant consideration of the matters involved.