Sunday 28 December 2014

Kenny hints vulnerable will get concessions in uproar over USC hike

Charlie Weston and Ralph Riegel

Published 17/05/2014 | 02:30

Minister for Finance Michael Noonan. Photo: Gareth Chaney Collins
Minister for Finance Michael Noonan. Photo: Gareth Chaney Collins

TAOISEACH Enda Kenny has signalled special concessions to avoid an automatic hiking of the Universal Social Charge for vulnerable people.

Up to 360,000 medical card holders are scheduled to be hit by a 'stealth' hike in the USC in a move that will cost a typical family €700 a year.

The legislation setting up the USC contains a special clause that will mean a higher rate will be applied to people with medical cards from January.

At the same time, high-earning self-employed people are due a boost with a cut in their USC rate, as revealed in yesterday's Irish Independent.

Mr Kenny acknowledged the so-called sunset clause forcing up the USC rate for medical card holders. But he said the Government would consider changing the provision, and promised "maximum flexibility and compassion" when dealing with the issue. He said the Government intends to reduce the number of people paying the USC rather than raise it.

Mr Kenny said he deplored the imposition of the sunset clause put in place by the former Fianna Fail-led Government in the original USC legislation.

The Taoiseach stressed that he was committed to helping minimise the tax burden on the vulnerable and disadvantaged – and strongly hinted that Budget 2015 would include measures to allow thousands of low-income families remain on a lower USC rate.

"I will say this ... this Government is committed to flexibility in the tax system, to give our taxpayers concessions where that can be done based on the strength of the economy," he said.

Age Action called on the Government to maintain the reduced USC rate for medical card holders, and to confirm the move before the local and European elections. Sinn Fein leader Gerry Adams described the 'stealth' USC charge hike as "yet another attack on the vulnerable and low-income families in Ireland".

From January 1 next, over 360,000 people are scheduled to see their USC soar from a 4pc rate to 7pc after a special concessionary period ends.

The increase will amount to as much as €700 a year for a single income family on €40,000 a year as the special concessionary rate, introduced for pensioners and medical card holders, is scheduled to end.

Finance Minister Michael Noonan blamed Fianna Fail for the rule that mandates a higher rate of USC for people who have medical cards, but earn less than €60,000 a year.

People, including pensioners up to the age of 70, who have a medical card currently pay the controversial USC at 4pc. This special 4pc rate applies if their income is less than €60,000.

The USC rate is set to jump to 7pc from the end of the year, under the 2010 legislation that put the USC levy in place.

Mr Noonan stressed that there was no risk to the special 4pc rate for over-70s whose income is less than €60,000.

And the calculations of income do not include social welfare payments, he said.

Speaking on RTE's 'News at One', Mr Noonan said: "The effective date for what's being predicted is the first of January next, but there's a Budget in between and this is something that will be considered very carefully in the Budget. . .

"One of our priorities should be not to put additional impositions, particularly on the low paid and middle income people, and secondly, to be very aware of vulnerable people in society who can't take any more in terms of tax and charges."

Irish Independent

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