Terence Flanagan
Question:194. Deputy Terence Flanagan asked the Minister for Finance his plans to abolish the universal social charge; and if he will make a statement on the matter. [8856/15]
View answerTuesday, 3 March 2015
Questions (194)
Written answers
The Universal Social Charge (USC) was introduced in Budget 2011. It was a necessary measure to widen the tax base, remove poverty traps and maintain 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 and 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. The USC cannot be considered as an additional tax given that its introduction allowed for the abolition of two other taxes i.e. the Income Levy and the Health Levy. It is important to note that the yield from the USC is broadly similar to that raised by the two charges which it replaced.
The Deputy will be aware that as a result of the changes introduced in the last Budget, all those who currently pay income tax and/or USC will see a reduction in their tax bill this year. As a direct result of the extension of the exemption threshold from €10,036 to €12,012, it is estimated that an additional 87,000 low income earners will be removed from the charge entirely. This is on top of the estimated 330,000 income earners that this Government removed from the charge in Budget 2012. This means that in 2015, approximately 28% of all income earners will not pay any Universal Social Charge at all.