USC will not be abolished, reveals Minister Noonan
The Universal Social Charge is here to stay despite being one of the country's most disliked taxes, Finance Minister Michael Noonan has said.
The charge was introduced in Budget 2011 by the late Brian Lenihan to replace the Income Levy, designed to be a temporary measure during the crisis, and the health levy.
However, Mr Noonan has said that it will be here for the foreseeable future and suggested it wasn't possible to scrap it because it was too lucrative. It brings in more than €4.5bn to the state's coffers each year.
"It raises a lot of money. I believe that everybody at work should pay something, but I think that low paid people should retain most of what they earn," the minister told Pat Kenny on Newstalk.
"But they should pay something because they're citizens."
And he quipped that income tax was designed to be temporary when it was announced in the House of Commons more than 100 years ago.
Mr Noonan said the USC raised about €4.5bn a year and that while there will be adjustments for the low paid, the USC was "going to be part of the personal taxation code."
But the minister also said he wanted to focus efforts on helping the so-called 'coping classes', which he claimed were those earning between €32,800 and €70,000.
People earning €70,000 were paying tax of just over €25,000, he said.
"You don't do that anywhere else. It's a tax on jobs.
"People on €70,000 are a little bit under €45,000 on take-home pay. They're not very wealthy," Mr Noonan said.
He added that the marginal rate of tax remained too high and he wanted to cut it further.
His remarks echo those of Taoiseach Enda Kenny, who pledged that after the first tax cut since the economic crisis in Budget 2015, he would knock at least another 2pc off the marginal rate of tax, and cut further if re-elected.
And he said the cuts would again be specifically targeted at middle-income earners on wages between €33,000 and €70,000 - the cohort of workers benefiting from next year's tax reductions.
Mr Noonan said last night he was frustrated about the lack of focus on tax cuts in the budget.
He said people would see the effect in their pay packets in January.
"It's not a big relief. But it's a start, and it's a start we didn't think we'd be able to make even a year ago," the minister said.
"The big idea is that we've all heard about the coping classes and the squeezed middle, it's those people on €32,800 to €70,000 who are going into the higher rate of tax."
Mr Noonan reiterated that he wants to make further tax cuts.
"It's not that we're committed to leaving USC there unaltered.
"We know there are difficulties in USC, but we see it as part of the personal tax code.
"It collects in excess of €4.5bn and it's not possible to abolish it and nobody would believe me if I made that kind of a promise."