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Here’s how much it would cost to get rid of the USC for incomes under €100,000

Finance Minister Michael Noonan said taxpayers are getting a cut in the USC.

IT’S THE MUCH-HATED tax that just won’t go away: the Universal Social Charge (USC).

In 2011, we were all assured that it would only be a temporary measure – but five years later, here we are.

As next week’s Budget approaches, there has been a lot of kite-flying as to what cut we can expect to see next Tuesday.

The Finance Minister Michael Noonan has confirmed there will be a cut – just maybe not the 1% Fine Gael committed to in their manifesto.

Rather than an all-out abolition, it’s understood there could be cuts to all three bands of 0.5%.

Total abolition

But how much would it cost to just get rid of the whole tax once and for all?

AAA-PBP’s Ruth Coppinger asked Noonan how much it would cost the State to abolish the charge for all incomes under €100,000 and maintain it as it is for those over €100,000.

Noonan said the Revenue estimates the cost to the Exchequer resulting from the abolition of the USC for incomes under €100,000, and the maintenance of all the existing USC rates and bands for taxpayers with income of €100k or over, is in the order of €2.2 billion and €2.553 billion respectively.

What if you abolish the USC for those earning under €100k, but leave the same band rates for those earning between €100k-€150k, while also introducing new bands and rates of 10% for income between  €150,001 and €200,000 and 12% for all income over €200,000.

Cost to the Exchequer 

Noonan said the cost to the Exchequer is €2.025 billion and €2.313 billion respectively.

These costs are net of the additional yield generated by the two new USC rates and bands proposed and assume the continued application of the surcharge of 3% on individuals who have non-PAYE income that exceeds €100,000 in a year.

“These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2014, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to projected 2017 incomes. They are provisional and may be revised,” said the minister.

Read: “There’s very little principle in Irish politics” – Fine Gael TD>

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