Fianna Fáil Finance spokesperson Michael McGrath has outlined the party’s plans to reform the Universal Social Charge. This will involve taking all income earners up to €80,000 out of the USC net over five years. Those earning above this level would pay a substantially reduced rate on their income.
Deputy McGrath, “My intention if Fianna Fáil is in government after the next election is to immediately abolish in Budget 2017 the 1% rate of USC that applies to income up to €12,012. Everyone currently paying the USC would benefit from this move. The cost of this is €173 million in the first year.
“We will also halve the 3% rate which applies on the next €6,600 of income. The cost of this would be €163 million in the first year and the vast majority of those paying the USC would benefit from this change.
“This combination of measures will skew the early benefit of tax reductions to low and middle income earners and would be worth €220 a year to anyone earning over €18,668. This cut in the USC will be worth proportionately more to low and middle income earners though all income earners in the USC net will benefit.”
Deputy McGrath also committed Fianna Fáil to introducing a best in class capital gains tax regime.
“The extension of Capital Gains Tax relief in budget 2016 was restricted to the first €1 million of gains. It remains an extremely complicated system. In contrast the UK has a simpler, clearer and more attractive relief which applies a flat 10% rate to entrepreneurial gains of up to Stg £10 million. This limit has increased three fold since the relief was introduced.
“We believe a bold policy measure in relation to capital gains tax does not pose a significant risk to the public finances. Fianna Fáil will cut the Capital Gains tax rate for entrepreneurs to 10% on the first €15 million of gains. The Department of Finance has provided us with an estimate that this would cost €74 million in a full year and we will fully provide for this in our manifesto.
“We will also cut the main capital gains tax rate to 25% as resources allow. This would cost €168 million in a full year.
“In reality the actual loss of revenue would be far less. Indeed from the 1998 cut to capital gains tax indicates that it will generate economic activity and raise overall revenue.”