Clare Daly (Dublin North, Socialist Party)
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173. To ask the Minister for Finance the basis upon which the universal social charge is levied; and the purpose for which the revenue collected is used. [20988/14]

Michael Noonan (Limerick City, Fine Gael)
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The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base. The revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.

Those on incomes below €10,036 are exempt from paying USC. Otherwise the standard rates are:

- 2% on the first €10,036

- 4% on the next €5,980

- 7% on the balance

In addition individuals aged 70 years or over whose aggregate income for the year is €60,000 or less, and individuals who hold a full medical card whose aggregate income for the year is €60,000 or less, are only subject to a rate of 4% on all of their income above €10,036.

Furthermore, there is a surcharge of 3% on individuals on non-PAYE income exceeding €100,000 in a year.

USC is a tax payable on gross income, including notional pay, after any relief for certain trading losses and capital allowances, but before pension contributions. It is not charged on social welfare and similar type payments, or on income which was already subjected to DIRT.