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Here's how much a cut in the USC stands to benefit you
The Budget is less than a fortnight away but how would a planned tax cut affect you?
FINANCE MINISTER MICHAEL Noonan has already said that the Universal Social Charge will be cut in the Budget, which will be announced on Tuesday week.
Speaking in July, the Fine Gael TD today told Newstalk that he would apply a 1% cut and “maybe a bit more”.
Taoiseach Enda Kenny has previously said that the 7 per cent rate of USC – which is levied on the portion of income from €17,576.01 to €70,044 – will be cut in Budget 2016.
A cut of least 1% will benefit thousands taxpayers who’ve been paying the much-hated USC that was introduced at the height of the financial crisis.
However, there have been suggestions that it may be cut by as much as 2%. The problem is that USC is a big money maker for the government, bringing in some €4 billion in tax revenue annually.
Cutting USC by 2% would cost €540 million and account for a large proportion of the €750 million Noonan has available to cut taxes.
However there are suggestions that the “bit more” Noonan spoke about in July means a cut of around 1.5% is on the cards.
One Department of Finance source suggested to us this week that a cut of 1.5% coupled with the adjustment of tax bands would be the likely formula the government agrees on to provide relief for middle-income workers.
But when we asked Noonan yesterday if a 1.5% cut was likely, he wasn’t giving anything away.
Well, you’ll be listening with bated breath on Budget day to get the exact figures. It’s a Budget day announcement.
But how would it effect you?
The 7% rate of Universal Social Charge is currently levied on the portion of income from €17,576.01 to €70,044.
Cutting this rate to 6% would mean:
- A person earning €25,000 would be €75 better off annually
- A person earning €35,000 would be €175 better off annually
- A person earning €50,000 would be €325 better off annually
- A person earning €70,000 would be €525 better off annually
Cutting this rate to 5.5% would mean:
- A person earning €25,000 would be €111 better off annually
- A person earning €35,000 would be €261 better off annually
- A person earning €45,000 would be €411 better off annually
- A person earning €70,000 would be €787 better off annually
Cutting this rate to 5 per cent would mean:
- A person earning €25,000 would be €149 better off
- A person earning €35,000 would be €349 better off
- A person earning €50,000 would be €649 better off
- A person earning €70,000 would be €1, 049 better off
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