Derek Nolan (Galway West, Labour)
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291. To ask the Minister for Finance the current estimate of the cost of making the universal social charge structure highly progressive, along the lines of option 4, page 13, of his Department's Review of the Universal Social Charge in November 2011; and if he will make a statement on the matter. [12110/15]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that the estimated first and full year cost to the Exchequer to implement Option 4 (p.13) of the Department of Finance's November 2011 review of the Universal Social Charge (USC) would be in the region of €878 million and €1.17 billion respectively. The USC rates cited in Option 4 are applied to both PAYE and self-employed income. I am also informed by the Revenue Commissioners that, consistent with the Option 4 proposal, the aforementioned estimates do not make any provision for exemptions currently available  to either medical card holders or individuals aged 70 or over  on income less than €60,000.

All figures above are estimates from the Revenue tax forecasting model for 2015, using the actual data for the year 2012 (the latest year for which data are available) adjusted as necessary for income, self-employment and employment trends in the interim. They are provisional and may be revised.

It should be acknowledged that since the Review was published there have been major changes to the USC. As a result of the Review the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.  In Budget 2015 I extended this exemption threshold to €12,012 to apply from 1 January 2015 onwards. This exempted a further 87,000 individuals from the charge. This means that 28% of all income earners are not paying any Universal Social Charge at all. Furthermore, I also reduced the two lower rates at which USC is charged and extended the threshold before the 7% rate becomes chargeable. These measures, together with the introduction of a new 8% rate on income over €70,044, as well as a rate increase from 10% to 11% on self-assessed income over €100,000, further enhanced the existing progressive nature of the USC.

However, as a result of the changes to income tax and USC in Budget 2015, all those who currently pay income tax and/or USC have seen a reduction in their tax bill this year compared to 2014 and the Government have committed to continue to reform the tax system in this manner in the coming years, contingent on having the fiscal space to do so.