Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

The Minister mentioned exempting those earning below the minimum wage from the USC tax net would have the effect of reversing the intention of the USC, which was to broaden the tax base, and also mentioned that the principle of the charge is that everybody should pay something regardless of how small. However, he acknowledged the measure he brought forward removed 300,000 people from the tax base. He believes 300,000 people should not be paying the charge regardless of how small and so has already accepted the principle there is a cohort of people who, because of their income, should not be subject to the universal social charge. The battle here is what is the level and what is the group of people to whom the universal social charge should not be applicable because their income is so low. The Minister has decided the threshold should be approximately €10,000. In my view it should be €17,542 based on the weekly minimum wage.

If we consider what the minimum wage stands for, it should be income which is protected and not subject to tax. It is a small amount of income. The Minister provided new figures suggesting the amendment would benefit 365,000 people. This would be spent in the real economy, in shops, restaurants and stores throughout the State. It is very unlikely much of the money, because of the income bands of the individuals, would be lost outside the State. It would be a boost to the real economy. The question is whether people on the minimum wage should pay the universal social charge and in my view their income should be protected and the charge should apply to those earning above the minimum wage. The removal by the Minister of 300,000 people from the USC net did not cost anything to the State, or if it did it was only a number of million euro. While the effect of the measure would have been in the region of €40 million or €50 million, another measure introduced in the same budget ensured the universal social charge recouped the amount lost. The reason the measure costs money is because those earning between €10,000 and €17,000 pay €132 million in a full tax year. The total was €94 million in the first year of its application. It is a significant portion of money for this cohort of people who are some of the most oppressed people in society.

We have put down a marker in the legislation with regard to the 4% figure.

That was to remind us of what the Government had been doing to the over-70s. Last night we voted on Government legislation to reduce their medical card entitlements by reducing the thresholds. It was the second time such legislation had been introduced by the Government in this calendar year. As the Minister mentioned, the Government also changed the universal social charge, USC, as it applied to the over-70s.

This relates to last night's motion on equality and impact proofing. We need an assessment of what cumulative budgets, including USC provisions, are doing to sections of society. On its merits, the Minister's contribution at this meeting has been justifiable and makes sense. Why should people avail of a special rate? However, we must also consider the medical card issue. When we put everything together, a picture of the Government's targeting of the over-70s can be painted. When the isolated legislative measures taken by the Ministers for Finance, Health and Public Expenditure and Reform are looked at together, one sees that the incomes and entitlements of a cohort of individuals, as well as the provisions they have enjoyed heretofore, have been subjected to targeting by the Government. I am unsure as to whether they were entitled to these provisions, but I am sure the Minister stood before the crowd at the gates and supported it in its cause a number of years ago when people were shouting about medical card entitlements being removed by Fianna Fáil. I am sure he also supported a special USC rate for the over-70s. This amendment is a reminder that the Government is rowing back on the commitments and provisions the over-70s have enjoyed heretofore.