Dáil Éireann Debate, Tuesday - 22 February 2022
40. Deputy Éamon Ó Cuív asked the Minister for Finance the amount of revenue raised each year since its inception by the universal social charge; the estimated amount to be collected in 2022; if consideration has been given to exempting all those earning the equivalent of a standard 39-hour week on the minimum wage from this charge; the estimated cost of doing so; and if he will make a statement on the matter. [9475/22]
View answerThe amount of revenue raised by the Universal Social Charge (USC) each year since its inception in 2011 is available on the Revenue website at the following link:
www.revenue.ie/en/corporate/documents/statistics/receipts/net-receipts.pdf
For the convenience of the Deputy, the following table sets out the USC net receipts from 2011 to 2021.
USC Net Receipts
|
Year |
€ Millions |
|
2011 |
3,114 |
|
2012 |
3,790 |
|
2013 |
3,930 |
|
2014 |
3,647 |
|
2015 |
4,147 |
|
2016 |
3,968 |
|
2017 |
3,724 |
|
2018 |
3,738 |
|
2019 |
3,797 |
|
2020 |
3,832 |
|
2021 |
4,399 |
The estimate yield for 2022 is €4,400m.
The USC was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.
The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of his/her own individual income and personal circumstances. The USC is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.
Currently individuals with incomes of less than €13,000 are exempt from USC. For 2022, it is estimated that 28% of all taxpayer units will be exempt from USC.
As regards the Deputy’s suggestion to exempt all those earning up to the equivalent of a standard 39-hour week on the minimum wage from this charge, c. €21,295, it is estimated that such a proposal would cost €64m and €75m on a first and full year basis, respectively. It would also narrow the tax base by exempting approximately 39% of taxpayer units from the charge.
I would note that in recent Budgets, including Budget 2022, this Government actively increased the USC ceiling for the 2% rate in line with increases to the national minimum wage, to ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate would remain outside the top rates of USC.
Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. In my view, a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.
