Fine Gael plan to abolish 'hated' USC ranks above every other tax promise
The abolition of the Universal Social Charge (USC) is the number one commitment that Fine Gael will make to voters during the election campaign, Finance Minister Michael Noonan has said.
After a rocky launch of Fine Gael's Long-Term Economic Plan last week, the minister has gone on the offensive to defend the figures on which he has based his election promises.
Fine Gael has struggled to explain how much money the party believes will be available for new spending commitments over the next five years.
Mr Noonan said yesterday that the figure was in the region of €10bn.
"Anybody who objects to these figures, who casts doubt over these figures, they now have an obligation to put the evidence forward because assertions that I'm wrong cut no ice. Prove it, prove it," said a clearly irritated Mr Noonan.
He was speaking as he unveiled details of Fine Gael's proposed tax package, which includes:
- A 5pc 'wealth tax' on incomes over €100k when USC is abolished.
- Lowering of PRSI threshold from €18,000 to €13,000.
- Increased social welfare payments during the first nine months of unemployment.
- Raising the minimum wage to €10.50.
- Increasing the Homecarers' credit to €1,650.
Mr Noonan said that under the plan every worker would see the marginal rate of tax drop below 50pc, with most middle-income earners set to pay 44pc.
He described the USC as "easily the most hated tax in the country", but said the decision to abolish it was not because it was so unpopular.
"Of all the commitments we are making in this election, this is the central commitment on our tax policies. It's a hated tax. It's a socially divisive tax. It was introduced as an emergency measure. The emergency is over," he said.
The clawback, which is essentially a 'wealth tax', will be gradually introduced on incomes over €100,000 but those workers will still make a net gain.
"When you go up the salary scales, if you were to abolish it completely without any clawback there would be very extravagant gains," Mr Noonan said.
One of the more controversial aspects of the Fine Gael plan is the lowering of the entry point for paying PRSI by €5,000.
Health Minister Leo Varadkar sought to defend this measure, saying the benefits would allow for free dental treatments, increased paternity leave, and higher short-term unemployment payments.
He said that a person earning €15,000 currently pays €210 in USC, but when that is abolished they will be paying €80 in PRSI.
The changes to the social welfare scheme will see somebody who loses their job receive a dole payment of €215 for the first three months. This figure will be reduced to €200 for the following six months before falling back to the standard €188 after that.
Mr Noonan also confirmed that Fine Gael plan to increase the inheritance tax threshold on the transfer of a family home from €280,000 to €500,000 over the lifetime of the next government.
Fine Gael's tax plan came on the same day that Ibec, the group which represents Irish business, published a report which claimed Ireland is not a low-tax or a low-spend economy.
The report says we pay less social insurance than average, but the Irish system redistributes those benefits to poorer households, in contrast to other countries.
Sinn Féin said Mr Noonan was "living in denial" if he thought his figures added up.