Thousands query new tax with Revenue
WORRIED taxpayers are bombarding the Revenue Commissioners with inquiries about the controversial new Universal Social Charge (USC).
The impact of the charge has come as a shock to many people, especially given that the tax has to be paid by those earning as little as €77 a week.
Thousands of people have phoned district tax offices to check if they have been overcharged on the USC.
A Revenue spokesman admitted yesterday that around quarter of all the calls to tax offices nationwide this month have been about the new charge.
Revenue offices received an additional 25,000 calls this January compared with last year. Most of these calls, although not all, related to the USC changes.
Tax experts said their information was that Revenue offices were being besieged by outraged taxpayers convinced that they had been overcharged.
The USC has proved to be hugely controversial as it brings 53,000 workers -- who never paid tax before -- into the tax net.
The charge replaces the income and health levies and is also levied on pensioners and those with medical cards, as well as those on low incomes.
Previously, the health levy did not apply to low-income earners or those with medical cards.
But now anyone who earns more than €4,004 a year has to pay the USC. It is not, however, levied on social welfare payments.
Incomes of more than €4,004 are subject to a USC of 2pc on the first €10,036 of income. This rises to 4pc on the rest of a person's income up to €16,016, and then 7pc for income above that.
Following amendments to the Finance Bill this week, the self-employed will have to pay 10pc on earnings of more than €100,000.
The USC is in addition to pay-related social welfare (PRSI) payments. And it is applied before pension contributions are made, which effectively means it is a tax on pension contributions.
For the over 70s, the highest rate of the USC is 4pc, although Finance Minister Brian Lenihan conceded this week that medical card holders will not have to pay more than 4pc either, a move that is expected to affect 200,000 people.
Taxpayers have also been hit hard by a 10pc reduction in tax credits, meaning they have to pay more tax, and changes to the tax credits which means more tax is paid at the higher 41pc tax rate.
Calculations by the Irish Taxation Institute show that a single person on €15,000 annually is worse off by €33 a month from Budget changes, or €400 a year, assuming a 6pc of salary pension contribution
A single person on €55,000 annually is €104 a month, or €1,249 a year, worse off. A married couple on €55,000, with one income and a pension contribution, will be €1,519 a year, or €127 a month, worse off.
More than 140,000 middle and lower-income PAYE workers will be particularly affected by changes in the budgetary arithmetic.
Just over 91,000 PAYE workers will move from the lower 20pc standard rate of tax to the top 41pc rate.
A further 53,000 lower-paid workers will, in the aftermath of Budget changes, move from not paying any tax to the lower rate.