Friday 23 March 2018

High earners to lose €1,650 tax credit in latest plan to cut USC

Finance Minister Michael Noonan Photo: Steve Humphreys
Finance Minister Michael Noonan Photo: Steve Humphreys

Kevin Doyle and Cormac McQuinn

High earners are to lose a tax credit worth €1,650 as part of the new government's plan to phase out the Universal Social Charge.

However, the new Government has yet to specify what salary a "high earner" receives.

Fine Gael significantly altered their tax plan during negotiations with Independent TDs and Fianna Fáil, it has emerged.

While their 'Programme for Government' maintains that "high personal tax rates in Ireland discourage work and jobs", they are to remove the PAYE tax credit for the executive level earners they want to attract to the regions. The commitment is among a number of measures which will be used to fund the "phasing out" of USC.

Finance Minister Michael Noonan believes he can pay for the abolition of USC through not indexing personal tax credits and bands, hiking the price of cigarettes, targeting fuel launderers, a new sugar tax and improving tax compliance.

An Oireachtas committee will publish a consultation document for a "medium-term income tax reform plan" by July "to make Ireland's taxation system more competitive".

A number of changes were made to the Programme for Government in the final hours before it was signed off by the Independent TDs who backed Enda Kenny for Taoiseach.

Notably a new section on 'Reforming the Budget Process' commits to "a process of budget and policy proofing as a means of advancing equality, reducing poverty and strengthening economic and social rights".


"We will ensure institutional arrangements are in place to support equality and gender proofing in the independent fiscal and budget office," it says.

The section on rural development has a number of alterations and now commits the new minister Heather Humphries to establishing a broadband and mobile phone taskforce within 100 days to investigate how to provide better services.

And there's a new paragraph on Vehicle Registration Tax (VRT) which states: "We recognise the difficulties faced by community and voluntary groups in relation to VRT rates on vehicles."

A new sentence has also been inserted to the section on bogs to commit the Government to reviewing the position in relation to "the planning code as it relates to turf cutters for domestic use".

And the document includes extra assurances for Independent John Halligan on increased cardiac care services at Waterford University Hospital and the provision of a second catheterization lab, subject to a favourable recommendation from a clinical review. The hospital is to review extending the existing lab hours, with "partial revenue funds to be liberated immediately to allow for the recruitment of staff to facilitate the extension of lab hours" if recommended by the review.

The wording on the creation of "Technological Universities" has been changed to remove a requirement that ITs merge before they can be upgraded as this is not always geographically "feasible". It is understood this was inserted at the request of Kevin 'Boxer' Moran to allow a pathway for Athlone Institute of Technology to become as university as it is some distance from other ITs. Mr Kenny described the 156-page document as "extensive" but said its simple objective was "to make people's lives better in every part of Ireland".

Irish Independent

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