Cut of 1pc to USC will bring relief for 1.5 million workers
Published 30/04/2015 | 02:30
The Government is planning a 1pc cut in the deeply unpopular Universal Social Charge (USC) in a move that will slash the personal tax bills of 1.5 million workers.
The decision to reduce the rate in October's Budget was revealed as Taoiseach Enda Kenny pledged the gradual phasing out of the USC.
Reducing the USC by 1pc would bring an annual saving of €225 for workers on €40,000. A person earning €70,000 would be €525 better off.
Mr Kenny admitted too many families have yet to experience the benefits of the economic recovery, adding that the number of emigrants is still of significant concern.
But in one of the first concrete pledges ahead of Budget 2016, the Taoiseach said the Government will slash the current 7pc USC rate on earnings below €70,000.
Government sources last night said a 1pc cut was the mostly likely option - but that going further could not be ruled out. However, sources pointed out that the 1pc cut would cost almost €270m in 2016.
With €750m in tax cuts available as of now, such a move would form a major part of plans for this Budget.
While Mr Kenny announced the Government's decision to phase out the USC, he gave no indication of a timeframe.
Sources involved in the budgetary process said a similar approach to last year is being taken whereby different "pressure points" are addressed.
Among the options are further changes to the tax rates, as well as increasing further the entry point for the higher rate of tax, which currently sits at €33,800.
Addressing the Dáil following Tuesday's Spring Statement, Mr Kenny said he is not prepared to allow the country to return to a period of instability.
"My commitment to the Irish people is that under this Government we are never going back," he said.
"The reckless commitments made by Fianna Fáil and the rest of the Opposition in recent weeks suggest they have learnt nothing from the mistakes of the past," he said.
"Given that Micheál Martin was a leading member of the Government that made these mistakes...this is unforgivable," he added.