Rose Conway Walsh (Sinn Fein) | Oireachtas source

This section sums up the budget, the choices this year and the fact that the wrong decisions were made. The rhetoric is about investment in public services but in section 2 we have the real intent of this Bill, which is to slash taxes. We will see an example of that later with capital acquisitions tax, CAT. It is not a matter of the €335 million of fiscal space this year or even the €390 million cost on the full year of these cuts. It is the €5.6 billion we are foregoing that we could bring in by 2021 simply by not making any changes to the universal social charge, USC.The Government's policy, supported mostly by Fianna Fáil, is to abolish this tax over the coming years. The Department's income reform plan laid out a number of options while a response to an FOI request by my colleague, Deputy Pearse Doherty, revealed that the Department drew up a few options to replace the revenue lost. These included an option to increase property tax sixfold while also increasing commercial stamp duty, CGT, CAT and other stamp duties. Other options were to increase both rates of income tax by 5% and a range of measures relating to indirect taxes such as increasing the excise on petrol and diesel by 18 cent per litre, on a pint of beer by €1.50 and on a glass of spirits by €1, and increasing each VAT band. The response stated the USC is progressive, and important in maintaining a broad tax base, and the better off would benefit most from its abolition. The Minister will tell us his plan is to phase out USC but it is worth putting on record what his Department says about the real cost in the context of other taxes.

The income tax reform plan lays out three plans for phasing out USC. The Minister has more or less followed the first option in year one by reducing rates. Even if he followed that plan for the next three years, he would expend much of the €1.7 billion fiscal space but not come close to abolishing the charge. Has he a plan to abolish it? At what point did he change his tune? His comments on the charge went from, "I should point out that it was never intended that the USC would be a temporary measure", to, "It was introduced as an emergency tax"; it cannot be both.