Written answers

Thursday, 4 July 2024

Department of Finance

Universal Social Charge

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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85. To ask the Minister for Finance if he will commit to supporting incomes by reductions in the rates and increases in the thresholds for USC; and if he will make a statement on the matter. [28560/24]

Photo of Jack ChambersJack Chambers (Dublin West, Fianna Fail)
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The Programme for Government (PfG), “Our Shared Future” contains a number of specific commitments relating to income tax. 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.” 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. Over the last three Budgets the Government increased the Standard Rate Cut-Off Point for single persons by 19 per cent from €35,300 to €42,000, with commensurate increases for persons who are married/in civil partnerships. The main tax credits - personal tax credit, employee tax credit and earned income credit - were increased by around 13.6 per cent, or €225 each, from €1,650 to €1,875. Over the last two Budgets, the Home Carer Tax Credit was also increased by 12.5 per cent, or €200, from €1,600 to €1,800.

In regard to the Universal Social Charge or USC, in Budget 2024, the ceiling of the band for the 2 per cent rate was increased by €2,840 from €22,920 to €25,760 in line with the increase to the National Minimum Wage. This continued the Government’s policy of ensuring full-time workers on the minimum wage will remain outside the charge to the top rates of USC. Accordingly, the ceiling of the 2 per cent USC rate band has increased cumulatively by 24.5 per cent, from €20,687 to €25,760, over the last three Budgets.

In addition, the 4.5 rate of USC was reduced to 4.0 per cent, representing the first reduction in USC rates since 2019.

As the Deputy will be aware the Government will set out the parameters for Budget 2025, including the size of any tax package, in the upcoming Summer Economic Statement. 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.

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