"That Dáil Éireann:
the Universal Social Charge is an unjust and regressive tax, bearing down most heavily on those least able to afford it;
the Universal Social Charge affects people earning as little as €77 per week;
the Universal Social Charge is indiscriminate and affects someone earning €100,000 at the same rate as someone earning €16,016;
low income workers, including medical card holders, working lone parents and working widows, who were exempt from the health and income levies which the Universal Social Charge replaced, are no longer exempt;
coupled with the changes to tax credits and bands introduced in Budget 2011, the Universal Social Charge has increased the burden of taxation on the working poor;
even though the levy system was flawed, there was a greater level of progressivity in it; and
calls on the Government to:
abolish the Universal Social Charge;
as an interim measure, reinstate the health and income levies; and
conduct an immediate impact assessment of levies as part of overall reform towards a streamlined and progressive taxation system."
Ba mhaith liom mo chuid ama a roinnt leis na Teachtaí Gerry Adams, Sandra McLellan, Brian Stanley, Caoimhghín Ó Caoláin agus Martin Ferris.
Sinn Féin has introduced this motion to the House to move to address the grotesque situation where the burden of the worst financial crisis this State has ever seen has fallen on those with the lowest incomes. Those people who were hanging on by their fingertips last year are now struggling with the additional burden of the universal social charge which has resulted in serious cuts in the incomes of the lowest paid in society. The charge, introduced in last December's budget, has proved Scrooge-like, as it effectively makes a supposedly temporary emergency income levy a permanent fixture of the tax system. By applying the universal social charge to the widest possible income base, with minimal exemptions, what was effectively done was to introduce an alternative tax system for those on low incomes.
The universal social charge, therefore, is little more than a working poor tax. The new charge disproportionately affects certain sections of society. It hits low income workers by significantly shifting the tax burden away from high earners and onto those on lower pay. Yet there is no "inability to survive clause" available for low paid workers. There is no amnesty for the pain of cuts to income and increases in consumer prices. There is no stress test on households in order to determine what support they need from the State in order to survive. This charge is regressive in the extreme. As in the days of Charles Haughey, we are not all tightening our belts, just the lower paid and society's poorest.
The replacement of the income levy and health levy with the new universal social charge has increased the level of inequality in the earnings distribution. The universal social charge of 2% is borne by those earning incomes upwards of €4,004, that is, people earning just as little as €77 per week. Anyone earning as little as €1 per week above this limit will be liable to pay the universal social charge on all of their income. It is perhaps a measure of the dire straits into which we have been thrust that even teenage children doing the proverbial paper round or college students working at weekends will now be forced to pay tax on this pocket money income. The rate of the universal social charge increases to 4% at €10,037 and to 7% at €16,017. That is how progressive this measure is. A person on €308 a week is paying the same charge at the same rate as someone on €3,000 a week. Where is the fairness in that? These changes have led to an increase in the numbers of the working poor and are less progressive than the combination of the health levy and income levy it is replacing. There was no consideration of ability to pay or how many thousands would be thrust into poverty and no impact assessment was carried out either before the measure was introduced or since to evaluate its real effects on thousands of people.
Three weeks ago Fine Gael and the Labour Party set out their stall in their programme for Government. They have bought themselves some time by postponing a decision on the future of the universal social charge by proposing another review. They have also proposed at least 32 other reviews in the programme for Government for which no terms of reference have been decided upon.
Níl achoimre maith go leor do na céadta agus na mílte daoine atá faoi bhrú siocair an cáin lochtach seo. Ní chuirfidh sé bia ar an mbord agus ní íocfaidh sé na billí. Ní féidir leis na daoine atá faoi bhrú mar gheall ar an cháin lochtach seo fanacht go dtí deireadh na bliana go dtí go mbeidh an achoimre seo réidh ag Páirtí an Lucht Oibre agus Páirtí Fhine Gael.
The Government needs to make its intentions known now. Does it intend to abolish this tax, extend it or leave it? With the arrival of a new Government, there is a great opportunity to simplify the tax system. There is an opportunity to address the endemic imbalances in the system where those on low incomes are disproportionately shouldering the burden of taxation.
When the former Minister for Finance, Deputy Brian Lenihan, introduced the universal social charge in his Budget Statement last December, he said he wanted "to move steadily in the direction of an income tax system that is fair, universal in its application and more easily understood." However, he created an alternative tax system for those on low incomes. There was nothing fair about it. The only thing that was easily understood was the Government's readiness to plunder the incomes of the poorest in society. PAYE and PRSI contributions are now accompanied by a new tax. The universal social charge is simply the consolidation of the nation's bank debt into one weekly or monthly payment for the nation's workforce. Of course, those on lower incomes who are more reliant on State services are also suffering the double whammy of cutbacks as part of the austerity drive.
The universal social charge should be abolished and the previous tax regime — the income levy and health contribution levy — reinstated in the interim. We do not pretend that the introduction of levies on top of income tax was good and we opposed them. However, while the levies themselves were unwelcome, they were, at least, introduced in a progressive manner. The reason the wealthiest have gained from the universal social charge is that the income levy had a progressive rate structure, while the top rate for the universal social charge applies regardless of whether a person earns, for example, €20,000 or €200,000.
During the general election campaign the two Government parties signalled that they would maintain the low tax model. However, a low tax model does not equate with a fair tax model. A low income tax model hides the high stealth tax structure central to the tax system. Instead Ireland should build a fairer tax system by creating a progressive tax base that would tax fairly and equalise wealth. In order to ensure income taxes are progressive, the system should consist of a minimum of three tax bands and possibly more. The key is to have a transparent, streamlined income tax system without levies, charges or stealth taxes. The first step in moving towards this system must be the abolition of the universal social charge and reverting temporarily to the previous system which included some progressive elements in its administration. It is from this system that a reform of the taxation system should stem.
The people cannot afford to wait for a review of the universal social charge. During the debate on the Finance Bill 2011 Deputy Michael Noonan, now Minister for Finance, said, "The floor for the universal social charge — about €4,000 — represents a very low income, and the Minister should accept an amendment to raise this threshold, perhaps by €1,000." According to the Minister for Finance and if the Government agrees that it is acceptable for somebody on €97 a week to pay tax, is this what we are to expect from the review?
The universal social charge must be abolished. I commend the motion to the House.