Joan Burton (Dublin West, Labour)
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73. To ask the Minister for Finance his plans for the reform of the universal social charge; and if he will make a statement on the matter. [30829/18]

Joan Burton (Dublin West, Labour)
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105. To ask the Minister for Finance his plans for the reform of the universal social charge; and if he will make a statement on the matter. [28994/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 73 and 105 together.

The Programme for Government commitment to the phasing out of the USC was specified to be as part of a wider medium-term process of income tax reform which would maintain the breadth of the tax base, while reducing excessive tax rates for middle income earners and limiting the benefits for high earners. We have made steady progress in reducing the personal tax burden in the last four Budgets with a particular focus on low to middle income-earners, and these reductions have been achieved primarily through cuts to the lowest three rates of USC.

Following a commitment that I made in Budget 2018, an inter-Departmental Working Group has been established to examine and report on options for the amalgamation of USC and PRSI. I am expecting to receive a Report from this Group by the end of July 2018. The Group is chaired by the Department of Finance and it includes officials from the Department of the Taoiseach, the Department of Public Expenditure & Reform, the Department of Employment Affairs & Social Protection, the Revenue Commissioners and an independent external expert.

Its Terms of Reference are to examine and present options for the amalgamation of PRSI and USC in a manner which seeks to address:

- the need to preserve the tax base having regard to the need for certainty, equity, and ease of compliance and administration;

- current and future funding challenges facing the Social Insurance Fund;

- issues likely to arise from a phased implementation over a number of years of the new instrument;

- simplification of the personal tax and social insurance systems; and

- any other relevant matters arising.

The Working Group is also considering the structure and rates of personal tax and social insurance in other countries and the macroeconomic and demographic contexts in Ireland as part of its work.

An important issue of consideration by the Group is the different treatment of the Social Insurance Fund and the USC in the Government accounts. The Social Insurance Fund is funded by PRSI contributions paid by employers, employees, the self-employed, voluntary contributors and it has some additional income from investments. It finances social insurance based payments. The USC is a tax receipt, is paid to the Revenue Commissioners and forms part of the Exchequer.

The available Government resources when considering the introduction of any option will also be relevant.

The amalgamation of USC and PRSI is a medium-term plan and any decision to proceed along such lines would be likely to be implemented over a number of years.