Fianna Fáil Finance spokesperson Michael McGrath has described the party’s proposals in relation to the Universal Social Charge as the fairest being proposed by the main parties in the election campaign. He added that the measures are fully affordable within the resources available over the next five years and will have the additional benefit of simplifying the income tax system which has become increasingly complicated in recent years.
Michael McGrath commented, “As the election enters its finals stages, the public are being offered a vast array of options in relation to income tax and the universal social charge. On the one hand you have parties such as the Social Democrats who want to ignore the need to improve the incentive to work and increase tax home pay and Sinn Fein who actually want to increase tax for people on modest income by changing tax relief for pension contributions.
“On the other extreme Fine Gael want to completely abolish the Universal Social Charge. They are planning to give a tax cut of over €7,000 to someone on €200,000 a year and €10,000 to a person earning €300,000 a year. Given that resources are limited over the next five years, there is no justification for this unlimited tax cut. What is even more alarming is that while Fine Gael say they want to have taxes “as low as we can afford to have them” they want to apply PRSI to people earning as little as €250 a week.
“In contrast Fianna Fáil’s proposal is fair, affordable and deliverable. Fianna Fáil is committed to eliminating the USC for all income earners on the first €80,000 of their income over five years. In the first budget after the next election we would immediately abolish the 1% rate of USC that applies to income up to €12,012. This would be worth €120 a year to all USC taxpayers. We will also begin to reduce the 3% rate which applies on the next €6,600 of income. The cost of our full Universal Social Charge is €2.64bn which is one third of available resources. The benefit to anyone individual is capped in contrast to Fine Gael’s runway tax cut.
“A further benefit is that what Fianna Fáil’s proposals will simplify the tax system which has highly complicated. By removing 3 rates of USC we will achieve a significant reform of the way in which employment income is taxed. Having been stung by criticism of their tax proposals Fine Gael have come up with idea of withdrawing tax credits from income earners over €70,000. The problem for Fine Gael is Michael Noonan has previously advised the Dáil that Revenue do not have the necessary systems to implement this in practice.
“Fianna Fáil is offering the centre ground alternative on income tax in this budget. Our proposals are realistic, balanced and deliverable in practice,” concluded McGrath.