Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

This section amends section 531AN of the Taxes Consolidation Act 1997 to give effect to the USC changes I announced on budget day. These changes are a continuation of a process of progressively reducing the marginal tax rate on low and middle income earners in a manner that maintains the highly progressive nature of the Irish tax system. My aim is to make it more attractive for people to return to work and stay in work while preserving a broad and stable income tax base to ensure our personal taxation system is both competitive and resilient. The section reduces the 2.5% USC rate to 2% and increases the ceiling for this new rate from €18,772 to €19,372 to ensure that full-time workers on the increased national minimum wage of €9.55 per hour do not pay the upper rates of USC. The 5% rate of USC is being reduced to 4.75%. This reduces the top marginal rate of tax on income up to €70,044 to 48.75%. This is the fourth budget in a row in which this marginal rate has decreased. I have also extended for a further two years the relief from the higher rates of USC which is available to medical card holders with incomes up to €60,000. In the longer term, I noted in my budget speech that I am establishing a working group to plan over the coming year the process of amalgamating USC and PRSI in the medium term. It is my intention that throughout this process the income threshold of €13,000 will be maintained as the general point of entry to the new, amalgamated charge.