Michael Noonan (Limerick City, Fine Gael)

The amendment was tabled by Deputy Doherty on Committee Stage. The Bill already provides for an increase in the exemption threshold from €4,004 to €10,036. This will cost approximately €47 million for a full year and will remove nearly 330,000 people from the charge. While this is a significant cost I do not expect it to result in a reduced yield for the Exchequer because of the switch to an accumulative basis of deduction and payment by the Revenue Commissioners. From 1 January 2012 they will save a similar amount by avoiding the occurrence of underpayments of the universal social charge.

If the cost of Deputy Doherty's amendment, which is what was requested by Deputy McGrath, were to be implemented it would be in the region of an additional €117 million for a full tax year and would remove an additional 273,000 people from the charge. This is a significant net cost, particularly in the context of the current budget balance. Moreover, a figure of €17,000 would bring the exemption threshold for the universal social charge above the current entry point to income tax of €16.50 for a single person.

To accept this amendment would be to seriously undermine the rationale for the introduction of the universal social charge. This was to broaden the tax base from its narrow, unsustainable level with a relatively small proportion of income earners responsible for a disproportionate amount of the overall income tax yield and to ensure that most people will make some contribution, however small, to the provision of services and towards assisting in the correction of the public finances. The removal of an additional 273,000 people from the charge would effectively reverse the base broadening already achieved by the decisions made by my predecessor. I oppose the amendment.

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