Joan Burton (Dublin West, Labour)

I wish to ask the Minister some questions about the universal social charge, which represents a significant change to our tax code. In effect, people will be charged for what they commonly understand as social provisions. I acknowledge that the PRSI rate of 4% is not being touched for most people but the universal charge is described in paragraph 2 of Financial Resolution No. 13 as a tax. It replaces the old health contribution and the levies that have applied since the advent of the financial emergency. As a tax, it will go into the general pool of taxation, whereas its name gives people to understand that it will be dedicated to social provision, including the areas of health and children.

The current health contribution is charged at a rate of 4% on income up to €75,000 but employees earning up to €500 per week, or €26,000 per year, are exempt. Under the new system, everyone with an income over €4,000 will be subject to the universal social charge at a higher rate. The rate of the levies in 2010 for an individual earning less than €75,000 was 2%. The universal social charge comes in at a very low level and individuals who earn more than €4,000 must pay the levy on their entire income.

The levy is reduced slightly for those who are aged 70 years and older. Every Deputy will be aware that medical card holders, including those who are aged 70 years or older, were exempt from the health contribution. I would be delighted to hear that the small print provides for this.

There are eight pages of text dealing with this levy, but I cannot find where it says that people in receipt of a medical card or who are over 70 are exempt from this new universal social charge. It is called a charge because it is general taxation and breaches the contributory principle that is at the heart of the social welfare contributory system, which is that one contributes when one works and receives entitlements in one's old age. I am surprised that Fianna Fáil opted for this measure. Perhaps it is a Progressive Democrat or a Green Party idea. I am surprised at the severity with which this measure is set out.

Can the Minister tell me I am wrong about medical card holders? As we all know, getting a medical card at present is pretty tough.

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