Hated USC to go in tax deal
High earners won't benefit as gains clawed back
Published 12/05/2016 | 02:30
High earners are to lose a tax credit worth €1,650 as part of the new Government's plan to phase out the Universal Social Charge.
The move will confine the benefits of the abolition of the hated tax, which came in during the economic collapse, to low and middle-income earners.
The Government has yet to specify what salary a "high earner" receives, but the threshold is expected to be €80,000 or €100,000.
Fine Gael significantly altered its tax plan during negotiations with Independent TDs and Fianna Fáil. The 'Programme for Government' maintains "high personal tax rates in Ireland discourage work and jobs". Yet the Government will remove the PAYE tax credit for the executive-level earners they want to attract to the regions. The commitment is among a number of measures which will be used to fund the "phasing out" of USC.
Finance Minister Michael Noonan believes he can pay for the abolition of USC through not indexing personal tax credits and bands, hiking the price of cigarettes, targeting fuel launderers, a new sugar tax and improving tax compliance.
Meanwhile, new minister Finian McGrath says he will pay his water charges if the Attorney General advises him he must do so while continuing to serve in Government.
Pressure has been heaped on the Independent TD by Fine Gael ministers.