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Monday 4 December 2023 Dublin: 4°C
Leah Farrell via Rolling News Sinn Féin spokesperson Pearse Doherty
Taxing Issues

Sinn Féin accuses Fine Gael of 'populist policy' as it retracts promise to abolish USC

Minister for Finance Paschal Donohoe yesterday announced plans to merge USC and PRSI.

SINN FÉIN SPOKESPERSON on Finance Pearse Doherty has accused Fine Gael of turning back on its ‘populist policy’ election promise to scrap the Universal Service Charge (USC).

Minister for Finance Paschal Donohoe yesterday announced plans to merge USC and PRSI.

Speaking to the Dáil yesterday Donohoe said:

I’m very clear on what the long-term end point is going to be for USC. We’ve a new Finance Minister, we’ve a new Taoiseach, we are entitled to make our assessments of what is the landing point from important policy areas like this .
We believe that landing point is where we integrate the PRSI code into the USC code and in the meantime we will look to reduce the cumulative burden for employees that’s consistent with the Programme for Government.

The plans to merge USC and PRSI is a stark contrast to Fine Gael’s general election promise to abolish the charge completely.

Donohoe has asked his officials to produce a study looking into new policy options for the next budget.

At the moment, the USC is paid by people who earn over €13,000 per annum. The officials suggested this be raised to €18,000.

Speaking on RTÉ Radio One’s Morning Ireland, Sinn Féin’s Pearse Doherty said his party never believed Fine Gael would abolish the charge.

“We stood apart and said it simply couldn’t be done,” he said.

“I do welcome that the penny has dropped but I do believe that this was a populist policy by the government trying to win the support of the electorate which could never be delivered.”

It’s a €4 billion price tag that comes with it but at least our position in Sinn Féin has been vindicated and I welcome the fact that the government are finally moving in this direction.

Conflicting views

Doherty said that Sinn Féin objects to lowering income tax on middle and lower earners.

“Those below the minimum wage should be taken out of the USC tax,” he said.

“There’s nothing simple about the USC. We’re not opposed to the idea, although the devil will be in the detail,” he warned.

He said that Leo Varadkar’s commitment to making sure earners would not pay more than 50% in combined USC and PRSI taxes is something Sinn Féin object to.

“[It] sounds reasonable until you dig into the detail. Only people who do that currently are individuals who earn over €70,000 so this is a half billion tax break for people who earn twice the average wage.

We cannot afford a half billion tax cut for the higher earners in society.

This isn’t the first time Fine Gael has been accused of ‘bracktracking’ on its election promise to scrap the charge.

In January 2016, the then-Minister for Finance Michael Noonan suggested that higher earners would be hit with new levies to “clawback” some of the benefits of the abolition of the USC, which at this point Fine Gael had committed to doing if re-elected.

Speaking to opposition parties in the Dáil, he said: “Your arguments are based on the assumption that it’s the intention of the government, if reelected, to abolish USC completely for all levels of income. That is not the position… We will have a clawback so that these very high benefits will not accrue to high earners.”

Sinn Féin also criticised Noonan on this occasion with the then-junior finance spokesperson Peadar Tóbín saying that his remarks were “a far cry” from Enda Kenny’s pledge to abolish the charges.

Read: Fine Gael’s promise to scrap the USC is not all it seems

More: Ireland’s much-hated tax that just won’t go away: The Universal Social Charge

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