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Universal Social Charge Exemptions

Dáil Éireann Debate, Tuesday - 8 July 2014

Tuesday, 8 July 2014

Questions (223)

Charlie McConalogue

Question:

223. Deputy Charlie McConalogue asked the Minister for Finance if he will reduce the universal social charge for retired persons in budget 2015; and if he will make a statement on the matter. [29902/14]

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Written answers

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, and the revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer, including state pensions. 

An individual is not liable to pay USC where his or her total income does not exceed €10,036. All State contributory and non-contributory pensions are exempt from the charge, and indeed are not included when calculating income levels for assessing whether individuals breach the threshold. Furthermore, individuals aged 70 and over, and medical card holders, benefit from a lower rate of USC (provided their total income does not exceed €60,000).

As a result of a review of the USC conducted by my Department in 2011, 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. 

As part of the normal budgetary preparations, my officials will examine potential options for changes to the tax system for my consideration as part of the overall Budget package. However, it should be borne in mind that under the terms of the Stability and Growth Pact, until Ireland has reached its objective of a balanced budget in structural terms, we may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions.

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