Brendan Griffin (Kerry, Fine Gael)
Link to this: Individually | In context | Oireachtas source

76. To ask the Minister for Finance if he will review the rates and bands relating to the application of USC to workers' incomes with a view to reducing the taxation burden on workers in the context of rapidly rising living costs; and if he will make a statement on the matter. [21467/23]

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

The Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. The primary purpose of the USC was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.

The Programme for Government (PfG), “Our Shared Future”, contains a number of specific commitments relating to personal taxation. These include the commitment that,"from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.” In addition, the PfG states that“the Earned Income Tax Credit will be equalised with the employee tax credit”. It also includes a commitment to increase the Home Carer Tax Credit to support stay-at-home parents and those with caring responsibilities.

Significant progress has been made in achieving these commitments. For example, over the last two Budgets the Government increased the Standard Rate Cut-Off Point for single persons by 13.3 per cent from €35,300 to €40,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits - personal tax credits, employee tax credit and earned income credit - were increased by around 7.6 per cent or €125 each from €1,650 to €1,775. It is also worth pointing out that the earned income tax credit was equalised with the employee tax credit in 2021. The Home Carer Tax Credit was also increased by €100 from €1,600 to €1,700 (a 6.3 per cent increase) in Budget 2023.

The last two Budgets have also seen the ceiling for the 2 per cent rate of USC increase by €2,233 from €20,687 to €22,920 in line with the increases in the National Minimum Wage (which, over that period, increased from €10.20 to €11.30 per hour). This ensured that a full time worker on the national minimum wage stayed outside the higher rates of USC.

Furthermore, this Government is acutely aware of the cost of living crisis and, so far, have announced or implemented approximately €12 billion worth of direct measures in relation to the cost of living.

As the Deputy will appreciate it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.