Wednesday 21 February 2018

FF accuses Varadkar of 'kite-flying' over his plans to cut taxes and reform USC

Social Protection Minister Leo Varadkar. Photo: Tom Burke
Social Protection Minister Leo Varadkar. Photo: Tom Burke
Kevin Doyle

Kevin Doyle

Fianna Fáil has accused Leo Varadkar of "trying to speak out of both sides of his mouth" after the minister revealed his vision for taxation reform.

In Saturday's Irish Independent, Mr Varadkar outlined his belief that there should be tax cuts for middle-income earners and more emphasis on social insurance benefits.

He said that society has been divided "into one group of people who pay for everything but get little in return due to means tests, and another who believe they should be entitled to everything for free and that someone else should pay for it".

A key plank of the Social Protection Minister's proposal is to replace the Universal Social Charge and PRSI with a new charge simply called Social Insurance. "This would be linked to wider and better benefits," he said.

However, Fianna Fáil's finance spokesman Michael McGrath has now accused Mr Varadkar of trying to distance himself from the Government's policy of abolishing the USC altogether.

"Leo's comment piece is significant in that he seems to be moving away from the abolition of the USC.

"That was utterly unachievable and not something we'd support given the impact it would have on funding for vital public services," Mr McGrath told the Irish Independent.

The Programme for Partnership Government agreed by Fine Gael and the independents states that "to make Ireland's personal taxation system more competitive, we will ask the Oireachtas to continue to phase out the USC as part of a wider medium-term income tax reform plan".

Mr McGrath said: "Leo is a minister in Government and shares collective responsibility. That's the policy he signed up to."

He accused the frontrunners to replace Enda Kenny as leader of Fine Gael of "tyre-kicking" in a bid to jockey for position.

"I'm not going to entertain any kite-flying from Leo.

"He's trying to speak out of both sides of his mouth. He'd want to make up his mind," Mr McGrath said.

"From our point of view, the most pressing issue on income tax is the very low entry level to the marginal rate of tax at €33,800.

"That's a very low level of income to enter the high marginal rate of tax.

"If resources are available, and that's not certain with Brexit and Donald Trump's policies, our priority is to see that entry point raised significantly."

Last night, Mr Varadkar told the Irish Independent it was Fianna Fáil who created the USC.

"It's not surprising they should want to retain it. I look forward to a robust debate on tax and social insurance reform with Fianna Fáil.

"Fine Gael will be offering people a choice. The principles I set out will ensure that taxes and personal taxes are low, simple and fair," he said.

In his tax plan, Mr Varadkar warned that Ireland needs to start bringing down the marginal rate of tax in order to attract "skilled, qualified and talented people home from London and other countries".

"The Government should never take more than 50pc of any euro you earn," he said.

His idea is to link the USC in with PRSI to create a social insurance fund that would be "ring-fenced to fund better services and does not just go into the big pot or black hole like USC".

Irish Independent

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