Advertisement

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Shutterstock/LDprod
Cash Money

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.

10/9/2015 National Quarterly Accounts Michael Noonan Sam Boal / RollingNews.ie Sam Boal / RollingNews.ie / RollingNews.ie

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

Read: It looks like the Irish economy is now taking off like a rocket

Read: This man doesn’t care that Sinn Féin ‘scares the bejaysus’ out of some people

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Your Voice
Readers Comments
163
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.