Timeline: Ireland's most-hated tax? Here is the history of the Universal Social Charge
Published 13/10/2015 | 10:47
Introduced as a temporary measure to get the country out of a deep hole, the Universal Social Charge has become more hated in Ireland than a bad cup of tea.
The Revenue helpfully describes it as: "The Universal Social Charge is a tax payable on gross income, including notional pay, after any relief for certain capital allowances, but before pension contributions."
Here is a timeline of the charge and a quick look into the future to see if it will ever be axed:
The Universal Social Charge is introduced by the late Finance Minister Brian Lenihan as a temporary measure at the height of the economic crisis.
There is no charge on income up to €4,004. There is a 2pc charge on incomes from €4,004 to €10,036 and a 4pc charge on those earning between €10,036 and €16,016. For all those earning more than €16,016, there is a 7pc charge on their income.
People have caught on - the USC has now become more hated than Thierry Henry, people who don't stand for their round and foreign tea.
The Budget sees the exemption level raised from €4,004 to €10,036.
There are no changes to the USC, it slips quietly through the Budget ready for another year of slithering through pay packets nationwide.
The same happens for Budget 2014. There are no changes to the rates or the thresholds for the USC.
Finance Minister Michael Noonan rules out axing the Universal Social Charge. “There will be USC for the foreseeable future," he said. "But the adjustments for low paid people will be for USC so they’re paying less. I’d like them to pay a little but not a lot.
“I believe everybody that works should pay something. They’re citizens and should be part of a contribution," he continued.
“It’s (USC) going to be part of the personal taxation code. A lot of people at the bottom don’t like it.
“Some people wouldn’t pay tax at all if it wasn’t for the USC. From an Exchequer point of view it’s very efficient."
Fine Gael TD John Deasy said: "The USC is a far bigger issue than water charges. People working hard for a living are feeling victimised by our tax system."
Taoiseach Enda Kenny catches on - a move must be made on the USC in Budget 2015 for a small thumbs-up from "the people".
Those earning under €12,012 are now exempt from the tax. There is a 2pc rate cut to 1.5pc for those on an income up to €12,012. There is a 4pc rate cut to 3.5pc on those who earn between €12,012 and €17,576. For those earning between €17,576 and €70,044, there will be a 7pc charge. There will be an 8pc rate added onto income from €70,044 to €100,000.
Finally, those earning more than €100,000 will see an 11pc cut on all self-employed income.
And so the "people-friendly" Budget has arrived.
We can expect cuts to each of the rates of the USC. The bands are also expected to be changed slightly so those earning up to €13,000 will now be exempt from the charge. Lower paid should see a cut from 1.5pc to 1pc, those earning between €12,012 and €17,576 should see a cut from 3.5pc to 3pc and those earning between 17,576 and €70,044, there will be a 1.5pc cut, bringing it from 7pc to 5.5pc.
Flash forward - Budget 2021
It is expected that Finance Minister Michael Noonan's Budget speech today will be a pledge to abolish the USC by 2021.