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FIANNA FÁIL IS going to battle with Fine Gael over cuts to the Universal Social Charge (USC) in the Budget.
Fianna Fáil is adamant that the confidence and supply agreement with Fine Gael agrees to steadily reduce the USC for low and middle-income earners.
However, over the summer months, Fine Gael has discussed increasing the entry point for the higher rate of tax.
Last week, Finance Minister Paschal Donohoe said he plans to amalgamate PRSI and USC over the next few budgets.
Fine Gael’s plans
He also gave specific details about increasing the standard rate cut-off point for income tax.
“The top 10% of income earners pay 24% of total income tax and USC, the top 6% pay 49% of total income tax and USC, and the top 26% pay 83% of all income tax and USC collected in our country. It is absolutely right that those who earn more pay more and those who earn less pay less.
“But a taxation system that takes more than 50% of the income of someone just above the average industrial wage is not fair, it is not efficient and it is not sustainable. I want to gradually increase the standard rate cut-off point for income tax. We will prioritise band widening over rate reductions. I believe the issues relating to the standard cut-off point and levels of USC for those with low or middle incomes, are areas we have to make steady progress on,” said Donohoe earlier this month.
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‘Mixed messages’
Ahead of the party’s think-in in Longford today, Fianna Fáil’s party leader Micheál Martin said the government have been giving “mixed messages” about tax cuts over the summer.
He said his party would be monitoring any fluctuations from Fine Gael in the agreement which is propping up the government.
Eamonn Farrell
Eamonn Farrell
“There have been promises of tax cuts. There have been promises of pension increases. One minister says it’ll be a fiver, another minister says something else. There have been all sorts of promises and to be honest it’s a bit incoherent. It’s confusing to the general public because an awful lot was happening in July/August in terms of the budget. As you get down to the wire the room for manoeuvre is becoming more narrow. Public services need improvement and delivery,” said Martin.
“We want to remain faithful to the confidence and supply arrangement,” he said, adding:
On the tax front it’s very clear in the confidence and supply that both parties are signed up for a reduction in the universal social charge.
The most effective one would be reducing the 5% to 4.5%. That would take in 1.3 million people. It would be more effective than what Fine Gael are proposing which will take in far fewer people on higher incomes.
We would benefit people on a wider income, particularly low to middle incomes. Anything up to €70,000 would benefit from our proposal. We believe that subject to the available funding that’s our priority. That would be the most effective way of dealing with tax.
A deal’s a deal says Fianna Fáil
He said if Fine Gael want to introduce tax reductions the party will have adhere to what’s in the confidence and supply agreement.
The agreement does specify: “The government must introduce reductions in the Universal Social Charge on a fair basis with an emphasis on low and middle income earners.”
“It’s very clear from the outset that what underpins our support for the budget is the confidence and supply,” he said, adding that the document is clear cut about what both parties signed up to in order to get a government formed.
The confidence and supply is very clear and both parties signed up. I’ve been getting mixed signals from Fine Gael over the summer because at certain times they are talking about their long-term plans. They acknowledged the existing of the confidence and supply in some of their comments during the summer.
But we’re very clearly focused on what we’ve signed up to in the confidence and supply agreement. This will be the second budget of that confidence and supply and we believe the commitment by both parties should be respected.
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I wish people would understand what’s happening here. The USC is being maintained at high levels in order to pay for bloated welfare and bloated public sector wages. It’s highway robbery of middle class taxpayers.
USC raises €4bn per year. Cut the social welfare budget from €20bn to €16bn overnight. Problem solved.
@Fred Jensen: clearly you don’t know that the majority of the 20bn social welfare bill is the childrens allowance which all parents are entitled to claimz regardless of their income. But sure don’t let the facts get in the way of your rants !
@Inanimate Carbon Rod: So by that maths over 10 billion is going on children’s allowance. So 10 billion divided by 1620 a year means there are 6.17 million children in this country!
@Inanimate Carbon Rod: actually you are wrong, Pensions are the larges, representing (31.8%), followed by working age incomes and Jobseeker’s Allowance and then children’s allowance. I don’t necessarily agree with Fred (on anything), but it is important to factually correct.
@Fred Jensen: just shut up and keep paying your taxes like a good little citizen you are so I can sit around and drink champagne and smoke some cigars out of my social welfare benefits, thanks for your contribution to my wellbeing Fred lol
@Fred yes that was part of it but that was only part of it and you seem set on forgetting the bailout cost also. You also seem keen on forgetting that the deficit came about mainly from a false, unsustainable tax base!
@Fred Jensen: The problem is that the social welfare budget is not simply the “dole”, in fact it is a very small part, from memory less than 1.5 billion, the balance is children’s allowance, pensions, carers allowance, supplementary payments to those on low incomes, illness and disability payments and I have probably missed out many more, so when you are looking for your 20 billion what exactly would you like to cut because going after the so called spongers gets you sweet f**k all despite the usual populist chants.
Too many people paying little or nothing in direct taxes. Wasn’t this one of the problems 10 years ago!. I know it’s not a great wage but someone on 18k currently pays less than 3% in income tax, USC and PRSI. That 18k could be the salary of someone with a part time job married to someone on 100k. They would still pay less that 3% in all direct income taxes. Leave USC alone for now and raise the bands. If you earn 40k, you pay 49% on anything over 34k. That’s draconian.
Why do you say raise the bands? Surely the solution to the problem you point out is to lower the bands so that people on lower income pay more tax? Lower the bands for the 20% rate and raise the bands for the 40% rate and eliminate any marginal tax rate over 40%.
@Fred Jensen: There is no lower band for the 20% income tax rate. There are tax credits, which amount to € 3300 for most people. PRSI doesn’t kick in until 18k. I think it should kick in at a lower amount, say 15k.
Absolute hose man ure saber rattling. If the FF sc um wanted to they could withdraw their support for the minority government and bring it down. Alas they won’t because they know if an election is called they would not for the next government. This is an exercise is political point scoring. Don’t forget also who introduced the USC in the first place and as an added bonus the man change of FF sat at the table and made decisions that brought us to the mess we are in.
FF FG labour Greens PD Independents Sinn Fein. It didn’t matter who we vote for we be still in the same corrupt cespool as always. It’s a revolution this country needs not an election.
I wish leaders of both parties would record this and look back in 10 years and think, what nonsense was I talking back then. Do they actually think the population are fools? Maybe we are for continuously voting them back in…
@John O Connor: actually they do think the population are fools. And the reason being is we are fools. There are too many sheep minded people in this country who buy into the ff fg bull .
@John O Connor: All you have to do is look back to 10 years ago and beyond. Bertie with his “soft landing recession” and CJ with his “we are living beyond our means”. You don’t have to wait for the future to see what bulls**t these lads talk.
@John unfortunately dude they KNOW we are fools (well the majority of us) and the simple politik of populism and election mode policies to appeal to personal greed & fear, works a treat for them every single time!!….
Non Story. Theatre at it’s best. The establishment bullshit rolls on. FG/FF the non coalition will put on a dog and pony show facilitated by the media. We will get tax cuts, but they will take it back by some other means. Meanwhile in the real world, the cost of living is rising, more people are homeless, there is zero innovation and zero sustainable jobs. If this carries on the Gaiety Theatre will have serious competition for Panto season.
@Ben Sheridan: like clockwork Mary Lou will be saying that those over 100k are getting 4K back and those on 20k are getting nothing back! Nothing irks the human soul more this…nothing could make the blood boil more!
The arch rivalry of convenience between FF and FG that benefits them both during election time, is starting to heat up again. They probably both know already when the election will be, the public will be last to find out!
The only difference between them is one letter in the alphabet. They swap unsatisfied voters between themselves during election time. If they came together to form one party, they’d both lose votes. Then it’s the same old useless politics after the election, regardless of which one of them gets into gov.
My accountant told me what my tax bill was for last year and I told him I don’t have that kind of money. The problem with screwing people into the ground is there won’t be anyone left to screw. It will take people a while to admit that political parties have no interest whatsoever in our welfare. Stop voting for them. Literally. Stop.
The think in season is almost over, back to the Goldmine Leinster house next week, same old bullshit to look forward to listening too. The more things change the more things stay the same, Never mind the golden pensions are getting nearer, and sure it will not be long until the October and Christmas break. Keep electing us lifers to look after your interests and you wont be disappointed, we know what is good for you, and ourselves, we are together on the one road maybe the wrong road. but we are together now who cares.
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