Dáil Éireann Debate, Thursday - 16 April 2015
68. Deputy Ciarán Lynch asked the Minister for Finance if he will confirm whether income tax is calculated on the full amount, inclusive of universal social charge, even though the universal social charge is deducted; his views on whether this is double taxation; and if he will make a statement on the matter. [14983/15]
Amharc ar fhreagraIncome Tax is imposed by section 12 of the Taxes Consolidation Act 1997 (TCA) and Universal Social Charge is imposed by section 531AM of the TCA.
In the case of Income Tax, the tax is charged on an individual's income from all sources, as calculated in accordance with provisions of the Income Tax Acts. Universal Social Charge is charged on an individual's income after any relief for certain trading losses and capital allowances, but before pension contributions.
In calculating the amount of Income Tax payable in a particular tax year, there is no provision to allow for a reduction in respect of any Universal Social Charge payable in the same tax year.
Income Tax, Universal Social Charge (and indeed PRSI) are separate and distinct charges on income and I would not agree that their imposition amounts to double taxation. These charges are aggregated when calculation of marginal tax rates is completed. For example, those who pay income tax at the standard rate only, in general face a marginal tax rate of 31%, which is comprised of 20% Income Tax, 7% USC and 4% PRSI.
