Fine Gael’s plan to abolish the USC 'favours the rich' - Fianna Fáil claim
FINE Gael’s plan to completely abolish the USC would be a "runaway tax cut" conferring limitless benefits on the better off, Fianna Fáil has said.
Fianna Fáil has pledged to phase out the USC for all earnings up to €80,000 per year. Anyone earning more than that would pay 8pc on the amount above €80,000 and the three existing lower rates of the tax would be eliminated.
Fianna Fáil’s finance spokesman, Michael McGrath, also challenged the Finance Minister Michael Noonan to explain an apparent €900m “black hole” in economic forecasts for the term of the next Government. Mr McGrath said Fine Gael's economic plan had stumbled in recent days, and he accused Mr Noonan of “scrambling” to make his numbers add up.
Mr McGrath also highlighted another €250m of unidentified “tax compliance measures” in the Fine Gael numbers, which he described as “highly dubious.” He utterly dismissed the plan to abolish the USC.
“The Fine Gael USC abolition is a runaway tax cut. For people of €200,000 per year they will gain €7,000 per annum. For people on €300,000 they will gain €10,000 per annum and for people on €400,000 they will gain €13,000. It’s limitless – it’s a runaway tax cut,” Mr McGrath said.
Mr McGrath and Public Expenditure spokesman Sean Fleming announced their party's plan to scale down the USC. They said the party's proposal would effectively eliminate USC for the vast majority of pensions.
The party also gave its assessment of the ongoing controversy the so-called “fiscal space,” the term for spare funds available for tax cuts and increased services for the next Government. Mr McGrath said Fianna Fáil believed the figure was €8.6bn.
He insisted Fianna Fáil would hold in reserve an additional €1.5bn which the EU may approve for spending. He said the amount of extra money in year one would be €500m, and €1.1bn in year two, and all going well would increase as the government term went on.
“We are committed to a balanced budget and we recognise that any expenditure-increasing or revenue-reducing measures are dependent on projected economic growth,” Mr McGrath said.
He said Fianna Fáil had learned the lessons of the past. “We will take a sensible approach to tax and expenditure decisions in the years ahead and prioritise public services”.
The overall package of €8.3bn is split 2:1 between expenditure and tax. “We believe this strikes the right balance between improving take home pay and ensuring families have access to quality public services”.