Sunday 25 February 2018

USC reforms to leave 330,000 low paid workers €201 better off this year - Noonan

Lyndsey Telford

REFORMS to the Universal Social Charge will leave 330,000 low-paid and part-time workers €201 better off this year, the Government has said.

Anyone earning up to €10,000 will be exempt from the charge, which previously applied to those taking home more than €4,004.

Finance Minister Michael Noonan said the tax change was evidence of how fair the Budget had been.

"This will mean that taxpayers will be able to earn up to that level without incurring the USC," he added.

"This measure benefits nearly 330,000 people and will assist people to move into the labour market."

However, children's charity Barnardos said even though thousands will be exempt from the USC, those on minimum wage who earn over the threshold continue to pay the same percentage as those earning €100,000.

Chief executive Fergus Finlay said more could have been done to protect the most vulnerable.

"Despite the increased exemption level in USC, Budget 2012 has failed to adequately redistribute limited resources in a fair way," he said.

"Increases in VAT and carbon tax and the introduction of a €100 household tax will hit the same families targeted by many of the cuts announced yesterday."

Trade union Mandate welcomed the fact that low-paid, part-time and seasonal workers employed in areas such as the hospitality sector and farming stand to gain from the USC reform.

But general secretary John Douglas said the Fine Gael-Labour coalition could have gone further, given the other tax increases and spending cuts announced in the Budget, by raising the exemption threshold to €16,016.

"VAT is going up by 2pc - which will adversely affect business in the retail trade where our members work - and the price increases brought about by this change will hit those on lowest incomes the hardest as they spend nearly all of their incomes," said Mr Douglas.

"In addition, the introduction of the annual household charge, the increases in carbon tax and fares for public transport will hit many people who are already struggling to heat their homes and travel to and from work."

Meanwhile, think-tank Tasc argued that despite the USC change, the Government has missed an opportunity to raise funds through taxing the wealthy.

Director Nat O'Connor pointed out this would have been more beneficial than the VAT increase, which she described as regressive.

"Tasc has argued that there is scope to raise taxes on, in particular, property, wealth and passive income such as rents," Ms O'Connor said.

"These taxes would be least damaging to the economy, and would do most to promote equality."

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