Written answers

Wednesday, 17 May 2023

Department of Finance

Universal Social Charge

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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40. To ask the Minister for Finance the estimated full-year cost of abolishing USC for all earners and replacing it with a higher income social charge of 10% on all earnings over €100,000 per year; and the estimated revenue that would be generated by the introduction of this new higher charge. [23528/23]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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The Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies.  Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.


The USC has played a vital role in meeting the many expenditure demands placed on the Exchequer. Receipts from the USC in 2022 were in the region of €5 billion.  If USC were to be abolished, it would be necessary to raise this amount from other sources.   

I am advised by Revenue that the estimated costs to the Exchequer, i.e., the shortfall between the tax revenue that would be generated by the introduction of a new additional 10% social charge on income above an annual threshold of €100,000 and the approximately €5 billion that would be foregone if the USC were to be abolished, are €2.8 billion and €3.3 billion, on a first and full year basis, respectively.   

Further, such a proposal would significantly narrow the income tax base and would expose our economy to significant risks in the event of a future economic downturn. A high income social charge could increase the marginal tax rate, which could create a clear disincentive to work and impact on the competitiveness of our tax code.

Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. It is my view a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.

As such, I have no plans to abolish the USC and replace it with a high income social charge.


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