Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Section 2 deals with the universal social charge, in particular the changes the Minister has introduced, including the increase in the 2% rate threshold in line with the minimum wage, the extension for the provision for medical card holders, which was coming to an end, as proposed by Sinn Féin, and the rate of 4.5% being reduced to 4%. As the Minister will be aware, the latter rate applies to individual incomes above €25,760. Hence, it has a distributional impact that benefits higher incomes more.

For example, if one is on €75,000, one's benefit from this measure alone would be €221, whereas if one was on €30,000, one's benefit from this measure would be €21.20, which is a difference of just over €200 from this measure for an income of €30,000 compared with €75,000. The Minister should bear in mind that the median income in this State is just above €30,000. There was a better way to deal with the reduction in tax for households, particularly with the universal social charge. The Minister would have seen our proposals where we would have abolished the lower rate, going from 0.5% to 0%, slashed the second rate from 2% to 1% and increased the entry point on the third rate to €25,959. The difference is that the distributional impact of such a measure would have the same benefit for somebody on €30,000 as for somebody on €75,000 or on more than that.

Will the Minister explain why he decided to amend USC in a way that benefits those who have, in some cases, twice the median income? They will have an overall benefit from this package of €292 whereas somebody just about on the median income has €92. Half of all workers will have a benefit of €92 from this change compared with what could have been done, which would be to make it more equal and fairer and have the same distributional benefit across income ranges.