Terence Flanagan
Question:62. Deputy Terence Flanagan asked the Minister for Finance his views on correspondence (details supplied) regarding the universal social charge; and if he will make a statement on the matter. [34990/15]
View answerThursday, 8 October 2015
Questions (62)
Written answers
Since coming into government, I have made several significant changes to the Universal Social Charge which have increased its fairness. As a result of a Review of USC by my Department, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. This removed an estimated 330,000 individuals from the charge in that year.
In Budget 2015 I further extended this exemption threshold to €12,012, to apply from 1 January 2015 onwards. This exempted a further 87,000 individuals from the charge. This means that 28% of all income earners are not liable for any Universal Social Charge at all. Furthermore, I also reduced the two lower rates at which USC is charged and extended the threshold before the 7% rate becomes chargeable. These measures, together with the introduction of a new 8% rate on income over €70,044, further enhanced the existing progressive nature of the USC.
The USC was designed and incorporated into the Irish taxation system to replace two other charges, namely the Health and Income Levies. It has played a vital part in meeting the many expenditure demands placed on the Exchequer.
Notwithstanding this, as a result of the changes to income tax and USC in Budget 2015, all those who currently pay income tax and/or USC have seen a reduction in their tax bill this year compared to 2014 where incomes are equal. Furthermore, the Government has committed to continue to reduce the tax burden on low and middle income earners in the coming years, contingent on having the fiscal space to do so.