Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I do not propose to accept this amendment. It is clear from the wording of the proposed amendment that Deputy Doherty's intention is that those earning the minimum wage or less should be exempted from USC entirely. The Deputy should be aware that the changes proposed in the Finance Bill include a provision to extend the exemption threshold for USC from the current €10,036 to €12,012 per annum. This measure alone removes an estimated 80,000 low-income earners entirely from liability to the charge.

This is in addition to the 330,000 individuals removed from the charge as a result of the extension of the exemption limit I introduced in 2012. It is now estimated that around 650,000 or 28% of all income earners will not be liable for the universal social charge, USC, from next year. In addition to this, as a result of the reduction of the two lower rates of USC and the extension of the threshold at which the 7% USC rate becomes payable from €16,016 to €17,576, all those earning the minimum wage will see a reduction in the amount of USC they pay next year. For example, as a result of the changes introduced in budget 2015 someone earning €17,542 will see his or her weekly USC charge of €10.51 per week fall to €7.19 per week. This means this person's tax bill will be reduced by just over 20%. In fact, the new higher threshold was specifically chosen to ensure that those on the minimum wage would be exempted from the higher rates of USC. It should also be noted that an individual on the minimum wage is also exempted from paying PRSI. Increasing the USC exemption threshold to €17,542 - effectively to €17,576 for administrative reasons - would increase the entry point of the charge above the current entry point to income tax of €16,500 per annum for a single employee. This would seriously undermine the rationale for the introduction of the USC which was to broaden the tax base from its narrow, unsustainable level, with a relatively small portion of income earners responsible for a disproportionate amount of the overall income tax yield. When the Government considers options for budgetary tax packages, it must take into account all the parts of the package. Therefore, single measures cannot be contemplated in isolation.

I take the point made by the Deputy that the amendment, to require the Minister for Finance to bring a report back to the Dáil, is a drafting device to ensure the amendment is acceptable and I understand his point in general. The prohibition on moving amendments which would impose a charge on the people is founded in the Constitution where the obligation is on the Executive to bring budgetary estimates before the parliament and it is the function of the parliament to dispose of those estimates.