Minister wants USC cut to help 'coping classes'
Published 28/12/2013 | 02:30
THE Government looks set to cut the highly unpopular Universal Social Charge (USC) in a bid to ease the burden on middle-income families.
Ministers are adamant that any tax cuts in next year's Budget must be targeted towards the so-called "coping classes".
The Irish Independent has learned that the Department of Finance is examining potential reductions to the USC as part of the preparations for Budget 2015. The levy, which was introduced in 2011, is currently calculated at 7pc on income of above €16,016.
Junior Finance Minister Brian Hayes has insisted that the current rate must be reduced.
"If there is one tax that is synonymous with the crash in this country, it is USC. I think people hate it and I can understand why. If we could see some reform of that I think that would be good," he told the Irish Independent.
"I'm against putting up USC, I want to take down USC for everyone and especially for the hard-pressed workers who see their salaries being hacked away in this regard . . . I think if we make progress on that area, that would be a really strong message in thanking the Irish people, those who are working especially, for taking on the burden of this taxation."
A single worker in Ireland pays the higher income tax rate of 42pc, plus 4pc PRSI (Pay Related Social Insurance) and the 7pc USC charge on any income above €32,800.
The combined effect results in a marginal tax rate of 52pc, a system Mr Hayes described as "scandalous".
"We have got to do something for hard-working, hard-pressed families who find that every euro they earn over €32,800 is taxed at 52pc -- when you add in PRSI, USC and tax.
"That is quite frankly a scandalous taxation model that has to change."
Meanwhile, the junior finance minister said he does not expect local authorities to increase the rate of property tax once they are given the discretion to do so.
From January 1, 2015 councils will technically be allowed to vary the rate by 15pc from the national rate.
However, Mr Hayes said this would be a matter for local politicians and not council bosses.
"I recognise that there are pressures on people on the property tax side. It's certainly not the intention of this Government to increase property tax," he said.
"They (council bosses) are not the ones who will have to do it. It's the councils who will have to vote on it. I think given that the level of tax people are paying at the moment, people are paying too much tax.
"For anyone to talk about increasing property tax at the moment, they'd want to be mad. It would be bad for the economy, bad for the local area and bad for the kind of message that we are trying to get out there that we need if anything to restructure public services, to fit the amount of money that they have, rather than hiking up tax, that would be crazy," Mr Hayes added.