THE GOVERNMENT HAS today published plans for how the Universal Social Charge could potentially be phased out over the next five years.

The Income Tax Reform Plan released today the Department of Finance is an overview of the personal tax system and – addressing a commitment made in the programme for government – looks at how taxation can be made more competitive, and fairer from a socio-economic standpoint.

Looking at USC, three possible options for phasing it out over the next three budgets are put forward.

These are:

• Reducing rates, which would keep the same bands in place and mean everyone earning over €13,000 a year would still pay the charge, but at a reduced rate;
• Increasing band ceilings, which would provide the quickest relief for low earners;
• Increasing exemption threshold, which would see around two-thirds of people taken out of USC over five years.

Implementing these measures would cost between €1.78 billion and €1.86 billion between now and 2020.

USC is expected to raise €4 billion in Exchequer receipts this year.

The controversial charge was at the centre of last government’s plans during Budget 2016.

A 1.5% reduction in the rate saw it drop to 5.5%.

USC rates to be cut across the board in #Budget16:
1.5% to 1%
3.5% to 3%
7% to 5.5%

— TheJournal.ie (@thejournal_ie) October 13, 2015

Source: TheJournal.ie/Twitter

It was announced back in May that the government would be producing today’s medium-term document.

It is unusual for such specific costings and tax projections to be given in advance of the Budget.    

Read: Here’s what’s changed with the Universal Social Charge in the Budget

Also: Plans for a ‘rainy day fund’ have been given the thumbs-up – if it’s done right