Michael McGrath (Cork South Central, Fianna Fail)
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71. To ask the Minister for Finance the estimated net cost per annum of USC changes announced in budget 2017 in 2017 and 2018; and if he will make a statement on the matter. [22539/17]

Michael McGrath (Cork South Central, Fianna Fail)
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72. To ask the Minister for Finance if his Department is reassessing the total cost of USC cuts announced in budget 2017; the estimated impact that this will have on the fiscal space in 2017 and 2018; if such a reassessment will impact on the State's compliance with EU fiscal obligations; and if he will make a statement on the matter. [22540/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 71 and 72 together.

The estimated first year (i.e. 2017) cost of the USC measures contained in Budget 2017 was €335 million, and the estimated full-year cost of the USC measures was €390 million, with 2018 being the first full year in which the measures are in effect.

While overall income tax receipts are currently below profile, down 3.1% or €198 million at end-April 2017, it should be noted that we were in a similar position at the same point in 2016, when one-off payments, c. €100 million are excluded, revenues were down 1.5% or €94 million against profile. However, due to a pick-up in receipts throughout the remainder of year, income tax finished 2016 ahead of target.

It is important to point out that income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. These include Deposit Interest Retention Tax, Life Assurance Exit Tax, Dividend Withholding Tax, Professional Services Withholding Tax and Back Duty. These payments can be 'lumpy' in nature and the timing of payments can vary from year to year. I am informed by the Revenue Commissioners that the majority of these specific components are having a drag on overall income tax receipts in the first four months of 2017. In relation to income tax (PAYE), the most significant component of overall income tax, it closed the first third of the year, broadly in-line with profile, down just 0.6% or c. €25 million.

Notwithstanding this, the performance of USC is lower-than-expected, and my Department is currently reviewing the performance of income tax in 2017, in conjunction with the Revenue Commissioners. The initial indications are that Revenue is satisfied that the overall estimate of the Budget 2017, Universal Social Charges (USC) changes of €335 million in 2017, were costed accurately.

At the time of Budget 2017, the apportionment of the total USC package between PAYE and Schedule D was allocated by my Department at €263 million and €72 million respectively, in line with previous norms. However, subsequent analysis by Revenue, indicates that the allocation of the USC package between PAYE and Schedule D should have been €311 million and €24 million in favour of PAYE and Schedule D respectively, due to the dynamics of the USC package. While, this is helping to explain the current under-performance against profile, it is important to point out that this reapportionment should have no adverse impact on the overall collection of USC receipts as this should equalise later in the year.

However, my Department along with the Revenue Commissioners will continue to examine this issue and consider all relevant developments.

Finally, with regards to State's compliance with EU fiscal obligations, Government policy as outlined in the recently published Stability Programme Update, still remains oriented to achieve our medium term objective of a structural budget balance, which we are projected to achieve in 2018.