Thursday, 23 November 2023
Ceisteanna Eile - Other Questions
Universal Social Charge
84. To ask the Minister for Finance how many earners in counties Kilkenny and Wexford, respectively, will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51539/23]
89. To ask the Minister for Finance the number of taxpayers in counties Cavan, Monaghan, Donegal, Sligo and Leitrim who will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51230/23]
94. To ask the Minister for Finance the number of earners in counties Kildare, Wicklow, Meath and Louth who will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51212/23]
96. To ask the Minister for Finance the number of earners in counties Limerick, Clare, Cork, Kerry, Tipperary and Waterford who will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51218/23]
113. To ask the Minister for Finance the number of earners in County Carlow who will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51208/23]
131. To ask the Minister for Finance the number of earners in counties Offaly, Laois, Longford and Westmeath who will benefit from the USC reductions announced in budget 2024; and if he will make a statement on the matter. [51302/23]
I welcome the recent USC cuts in the budget. I am particularly interested in how many earners in County Kildare will benefit. The Minister might also give details on counties Wicklow, Meath and Louth. My colleague Deputy McGuinness is interested in counties Kilkenny and Wexford. I ask the Minister to give us a broad statement on this but I am particularly interested in Kildare taxpayers.
As part of budget 2024, I introduced a personal income tax package to the value of €1.3 billion in 2024 and €1.5 billion in a full year. The tax package is built around three key pillars. These are changes to tax credits, the standard rate band and USC. The Government has sought to use each of these levers to spread the benefit of the available package as effectively as possible.
With regard to income tax, the main tax credits, which are personal, PAYE and earned income tax credits, will be increased by €100 to €1,875. The standard rate band will be increased by €2,000 to €42,000 for single persons, with commensurate increases for married couples and civil partners. As the budget focused on tackling child poverty, I also increased the home carer tax credit by €100 to €1,800, the single person child carer credit by €100 to €1,750 and the incapacitated child tax credit by €200 to €3,500.
I am aware that the USC is a particular point of concern for many people. This is why I introduced the largest USC package since 2016, with a cost of €350 million in 2024. The 4.5% rate of USC was decreased by 0.5% to 4.0% and the ceiling for the 2% rate of USC was increased by €2,840, from €22,920 to €25,760. The increase in the 2% ceiling will ensure that with the increase in the national minimum wage from €11.30 to €12.70 per hour, a full-time worker earning the minimum wage will remain outside the higher rates of USC. Additionally, the reduced rate of USC concession for medical card holders was extended for a further two years until the end of 2025.
To answer the Deputies' questions, I am advised by Revenue that a total of 1.6 million taxpayer units will benefit from the USC measures announced in the budget. A taxpayer unit counts jointly assessed couples as one unit. However, I am further advised by Revenue that this estimate is provided using Revenue’s micro-simulation income tax model, Tax Modeller, and while this model uses taxpayer unit level data, estimates broken down by taxpayer location are not generated as part of the modelling process. Therefore, a county-by-county breakdown of the number of taxpayer units that will benefit from the USC measures announced in the budget is not specifically available.
I may not require the full expanded time. I thank the Minister for the reply. I note the number of 1.6 million taxpayer units in the State and that a taxpayer unit can encompass a jointly assessed couple. I assume that if one were to apply a pro ratacalculation by population, one could arrive at a reasonable estimate of the Kildare figures and those for other counties. I will do this. Kildare is a very industrious and highly populated county, with a high level of employment and enterprise. It is appropriate that this is rewarded in measures such as this.
A key part of the social contract is that we reward enterprise, work, innovation and industry. This is at the heart of this long-promised measure. It has been long sought, since the USC was introduced as a crisis measure during the difficult fiscal years. I understand it was always intended that, eventually, when circumstances permitted, it would be phased out or certainly scaled back. Thanks to the good stewardship of the economy under the Minister and his predecessor, we are in this happy place now with Exchequer surpluses. We can begin to share around the fruits of this labour again.
I welcome the measure and the other measures mentioned by the Minister. I will study these other benefits and the widening of various bands, the medical card exemption and how people can avail of USC credits in other ways. I welcome that minimum wage earners are exempt and out of the loop. That is very important. The squeezed middle is benefiting, which is important. It is also important that enterprise is rewarded. I thank the Minister. I do not need to take the full expanded time. In short, I commend the measures.
I thank Deputy Lawless. It is worth acknowledging that we are implementing the agreed position of the three parties in government. We negotiated a programme for government that provides for indexation of credits and bands as earnings have begun to grow following Covid. We have made significant progress on tax credits. Increasing credits results in a fair distribution of the benefit. We have also increased the entry point to the marginal rate and made changes to the USC. These are the three key pillars.
Next year, we expect incomes to rise for many, perhaps by 3%, 4% or 5%. We have earnings growth in the private sector and discussions about to get under way on the possibility of a public sector pay agreement. In the absence of making changes to the income tax system, not only would people pay more tax as their earnings grew but their effective rate of tax would increase. The case is often made in the House that there should be no income tax reductions in the budget. In many respects, not to do so would result in an increase in real terms in the burden of tax. We believe this would be fundamentally unfair. That is why we did the best we could with the resources available to bring forward a fair and balanced package that spreads the benefit of the gains across the income levels, while recognising we have a highly progressive income tax system in Ireland. We will continue to maintain and protect this progressivity. It is an important feature of our system.