Universal Social Charge Dail Éireann — 2023-06-22 ============================================================ Richard Boyd Barrett (PBP), Dún Laoghaire An opinion poll over the past week or so showed that a majority of people wanted the hated USC, to be abolished, something that was promised by Fine Gael in 2016. When it was imposed during the economic crisis, it was supposed to be a temporary emergency austerity tax. It was cruelly and unfairly imposed on working people, costing them thousands of euro every year. Despite the emergency being over and record budget surpluses, however, workers are still being hit with USC. Will the Minister listen to public opinion and abolish this hated charge, at least for those earning under €100,000, in order to give working people a break? Michael McGrath (FF), Cork South-Central 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 provide a steady income to the Exchequer to provide funding for public services. USC is an individualised tax, meaning that a person's liability to it is determined on the basis of his or her 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, which ensures it is a stable and sustainable source of revenue for the State. It is important to point out that in 2016, joint research by the Department of Finance and Economic and Social Research Institute, ESRI, found that USC represented a more stable form of revenue than income tax. The findings highlighted that USC revenues would fluctuate by less than income tax revenues whenever income was volatile, for example, where the economy moved from a boom to a bust. Given the openness of the Irish economy and consequent susceptibility to economic shocks, the contribution that USC makes to the stability of the State's revenue sources is considerable. It is also important to note that the yield from USC is approximately €5 billion. In fact, it is projected to be €5.2 billion this year. If USC were to be abolished, it would be necessary to generate this yield from alternative sources. Currently, individuals with incomes of less than €13,000 per annum are exempt. In addition, USC does not apply to social welfare payments, for example, the contributory and non-contributory State pensions. In the current year, it is estimated that more than 1.1 million taxpayer units - 35% of all taxpayer units - will be exempt from USC. We have 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 International Monetary Fund, IMF, the OECD and the ESRI. It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution according to their means, is the most fair and sustainable income tax system in the long term. Richard Boyd Barrett (PBP), Dún Laoghaire The Minister is rewriting history in terms of the rationale for USC. It was not put forward on the basis of broadening tax bases or anything like that. It was put forward as an emergency tax in response to a crisis created by banks and developers and it was imposed on top of the income tax that workers paid. If you earn €45,000 per year, you pay €2,300 on top of your income tax. If you earn €70,000, you pay €4,300 on top of your income tax. Due to the cost-of-living crisis, workers have lost €2,000 to €4,000, depending on their mortgage situations and so on. People are being hammered at the moment and they need a break. Here is the irony and contradiction. While ordinary workers are losing out because of USC, net household wealth has increased dramatically. There is a group of people who are winning in the current crisis, but it is always the ordinary worker who has to pick up the tab. Why does the State not pay for the abolition of USC by imposing higher taxes on the very wealthy, as we have proposed? This would cover the cost of getting rid of what is an unfair austerity tax, one that was supposed to be a temporary emergency tax. Michael McGrath (FF), Cork South-Central I am glad to hear that the Deputy supports reducing the burden of income tax on ordinary workers. Richard Boyd Barrett (PBP), Dún Laoghaire We have always done that. Michael McGrath (FF), Cork South-Central When we proposed such reductions in recent budgets, he opposed them. That is a fact. Richard Boyd Barrett (PBP), Dún Laoghaire No, we did not. On USC? Michael McGrath (FF), Cork South-Central Did the Deputy ever vote for a finance Bill? Richard Boyd Barrett (PBP), Dún Laoghaire We never voted for the Government's budgets for other reasons. Michael McGrath (FF), Cork South-Central The Deputy never voted for a finance Bill. Richard Boyd Barrett (PBP), Dún Laoghaire Not because of that. Michael McGrath (FF), Cork South-Central Finance Bills are the way in which we bring about reductions in the burden of income tax. Richard Boyd Barrett (PBP), Dún Laoghaire It was because of all the other stuff in the Bills. Michael McGrath (FF), Cork South-Central By the way, the Deputy did not say what he would replace the €5 billion with. When what we deem to be, and what I am advised to be, windfall receipts in the current year are stripped out, we have an underlying deficit, yet the Deputy just asked whether we could eliminate a tax that brought in €5 billion without explaining what he would replace it with. He might argue he will do that in his pre-budget submission, which I look forward to seeing. We will honour the commitment we made in the programme for Government. We will reduce the burden of income tax on all low- and middle-income workers. On this occasion, I hope the Deputy might support it. Richard Boyd Barrett (PBP), Dún Laoghaire There is the unseemly spectacle of Fine Gael and Fianna Fáil scrambling over who will get the credit for the reduction in USC. We have been consistent in all of our budget submissions since the introduction of USC in arguing that it should be abolished and that, although USC was unfair, its abolition should be paid for. The Minister knows this, as he has seen our budget submissions as well as the questions we tabled recently arguing that USC's abolition should be paid for by having new bands of taxation in respect of those on incomes of more than €100,000 as well as by having wealth taxes, for example, those that Oxfam is proposing, which are similar to the one we have proposed every year. Oxfam estimates that a tiny tax on those who have more than €4 million in wealth could raise up to €8 billion per year, which would be more than enough to pay for USC's abolition in respect of those earning less than €100,000. Would that not be fair at a time when some people are being crushed by the cost-of-living crisis yet there are others whose wealth has been growing every year? We can see that growth in the Central Bank's quarterly reports on household wealth. That wealth is heavily concentrated at the top of Irish society, where people are doing well while workers are being hammered. Why do we not address this issue in a fair way? Michael McGrath (FF), Cork South-Central There is an obligation on the Deputy to be consistent. When we introduce budgets where we increase PAYE and personal tax credits for low-income workers, the Deputy votes against them. We have a programme for Government----- Richard Boyd Barrett (PBP), Dún Laoghaire I do not. Michael McGrath (FF), Cork South-Central Yes, the Deputy does. He should check the voting record. Richard Boyd Barrett (PBP), Dún Laoghaire We vote against the Government's finance Bill. That is a different thing. Michael McGrath (FF), Cork South-Central The Deputy has never voted in the House for a package of income tax reductions. He then comes in during oral questions----- Richard Boyd Barrett (PBP), Dún Laoghaire We propose them in our budget submission every year. This is nonsense. Michael McGrath (FF), Cork South-Central -----and proposes to get rid of a tax that brings in €5 billion per year. We have a programme for Government commitment, one agreed by all three parties in government, to index credits and bands in line with Ireland's growth. Richard Boyd Barrett (PBP), Dún Laoghaire That was in our budget submission last year as well. Seán Crowe (CC), Dublin South-West Deputy, allow the Minister to reply. Michael McGrath (FF), Cork South-Central That is the Government's commitment----- Richard Boyd Barrett (PBP), Dún Laoghaire The Minister can see it. I have it with me. I will show it to him. Seán Crowe (CC), Dublin South-West The Minister to reply, please. Michael McGrath (FF), Cork South-Central -----and is what we have implemented in the past. Richard Boyd Barrett (PBP), Dún Laoghaire It was costed as well - €850 million. Michael McGrath (FF), Cork South-Central The commitment I will give is that we will reduce the burden of income tax----- Richard Boyd Barrett (PBP), Dún Laoghaire Index linking the existing tax bracket was in our budget submission. Seán Crowe (CC), Dublin South-West Let the Minister reply. Michael McGrath (FF), Cork South-Central -----on workers and others who pay income tax in budget 2024. That will be done. I look forward to seeing the Deputy's pre-budget submission. Richard Boyd Barrett (PBP), Dún Laoghaire It was in our budget submission. The Minister is misinforming the House. Michael McGrath (FF), Cork South-Central I hope that he will support income tax reductions this year. Richard Boyd Barrett (PBP), Dún Laoghaire You should read our budget submission from last year. Jennifer Carroll MacNeill (FG), Dún Laoghaire You should read the finance Bill. Seán Crowe (CC), Dublin South-West Before we move on, I welcome our visitors from Portroe National School in Tipperary, who are in the Public Gallery. We need to be on our best behaviour for the schoolchildren. Richard Boyd Barrett (PBP), Dún Laoghaire That will cheer us all up. --- Source: Houses of the Oireachtas. Licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). The Official Report is revised after first publication; the fetch timestamp below identifies the version quoted. Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/dail/2023-06-22/debate/main Retrieved: 2026-08-14T04:52:03+00:00 Sitting date: 2023-06-22