Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

269. To ask the Minister for Finance if he will address a matter raised in correspondence (details supplied) regarding the universal social charge. [40917/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, 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, and the revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.

The USC is an individualised charge based on the income of each individual. There is no transferability of credits or bands for married couples as applies in the income tax system. However, for the examples given, the cumulative liability to USC for employees is exactly the same in both cases.

Notwithstanding this, the income tax system allows married couples to be jointly assessed so that they can choose to the transfer the personal tax credit and up to €9,000 of the standard rate band, to a higher earning spouse (where the credit and/or the standard rate band cannot be utilised fully by the income of the transferring spouse). In the examples given, an individual earning €20,000, would be in a position to transfer the full €9,000 of the standard rate band to their spouse earning €120,000. Where both spouses earn €70,000 each, the standard rate band is used up fully by each spouse, as a consequence of the levels of their separate incomes.