Dáil Éireann Debate, Tuesday - 18 October 2022
263. Deputy Jim O'Callaghan asked the Minister for Finance the amount of tax that was raised in 2020 and 2021 by the 3% levy on self-employed income above €100,000; and if he will make a statement on the matter. [51100/22]
View answer264. Deputy Jim O'Callaghan asked the Minister for Finance the reason that the 3% levy on income above €100,000 is limited to those who are self-employed; and if he will make a statement on the matter. [51101/22]
View answerI propose to take Questions Nos. 263 and 264 together.
The position is that the amount of Universal Social Charge (USC) liability associated with the 3% surcharge on non-PAYE income in excess €100,000 per annum, can only be ascertained when the relevant tax returns have been filed. Data for 2020 should be available in Q4 of this year, while data for 2021 will only be available next year once the returns for 2021 are received, processed and the relevant figures compiled.
However, I am advised by Revenue that the liability associated with the 3% surcharge on non-PAYE income in excess of €100,000 amounted to €71 million and €65 million in 2019 and 2018, respectively.
The origins of the 3% USC surcharge that applies on non-PAYE income in excess of €100,000 per annum, go back to Budget 2011 and Finance Act 2011 when the USC was first introduced.
Against the background of difficult decisions at the time to address problems associated with the public finances, the 3% USC surcharge was introduced to ensure that the relative position as regards the top marginal tax rates for PAYE income earners (52%) and self-employed income earners (55%) remained unchanged when compared with the position before Budget 2011.
As the Deputy will be aware, the Programme for Government states that the 3% USC surcharge applied to self-employed income is unfair and it contains a commitment that proposals will be considered to ameliorate this over time as resources allow.
However, as the Deputy will appreciate, having regard to current cost of living pressures which impact on low income earners the hardest, it would not be appropriate to seek to address the USC surcharge issue at this time.
It is also important to note that abolishing or reducing the USC surcharge on non-PAYE income would result in a reduction in the overall tax yield, thus potentially raising the question of an alternative revenue stream.
