The Government does not intend to abolish the universal social charge (USC) overnight, the Department of Finance has said, following the release of documents showing its phasing-out will benefit higher-income earners most.
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The USC, which was introduced as a revenue raising measure in January 2011, collects around €4bn a year.
Among the suggestions detailed in the document, prepared for the Minister for Finance Michael Noonan by Department of Finance officials, was to increase property tax by 600% in a scenario where the charge was to be scrapped with immediate effect.
The document also says that the USC could be phased out over time, using the available fiscal space.
Speaking today, Deputy Doherty said: “This is the information that Fine Gael and Fianna Fáil were not telling us about during the recent general election which was fought on this issue”.
They also said there is no intention to raise the property tax in this year’s budget.
The paper, written in February, outlines alternative taxes that might be needed to make up any shortfall in USC.
“While scope is limited in this year’s budget, there will be a further move to curb USC, especially for mid- to low-income earners”. “The scale of investment that will not be made because of a commitment to carry out what the Department of Finance has called “regressive” and favouring the better off is now clear from the shocking options that were presented”.
The briefing paper outlines ways to cover the shortfall from getting rid of the USC – including adding €1.50 to the price of a pint.
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However, Fine Gael TD Noel Rock has said Mr Doherty’s claims are “disingenuous nonsense created to grab a quick, cheap headline at the expense of reality”.
