Friday 30 September 2016

USC should be converted to pensions scheme, not abolished - Ibec

Published 08/02/2016 | 07:23

'Abolishing USC is a step in the wrong direction' - Ibec
'Abolishing USC is a step in the wrong direction' - Ibec

Getting rid of the Universal Social Charge (USC) would be a step in the wrong direction according to business group Ibec.

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In a new report published by Ibec, titled 'Election 2016 - Rethinking the tax debate', the group says that moving to remove the USC will make Ireland's tax system less efficient.

Ibec says that USC is an efficient tax that captures a broader base of income and that removing it would put more pressure on smaller numbers for the total income tax take.

The group also said its abolition would have a negative impact on the state pension.

"It makes little sense to abolish the USC or remove further workers from it only to attempt to re-introduce a similar tax in the form of a universal pension scheme in the future. A proportion of the USC should be converted to a universal pension scheme in the term of the next government."

Ibec also recommended a reduction of Ireland's top marginal rate of income tax to 45pc. In the report the group says that the change would result in very little loss in revenue.

Senior economist at Ibec, Gerard Brady, says that election debate needs to be backed up by fact.

"Ireland raises more than average European countries through income tax, but our marginal rate is out of line and workers hit it too early. Election tax promises have focused on who will get what, but we need to ensure the tax system as a whole works to support growth and job creation."

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