New Department of Finance figures show USC abolition even more reckless than thought – Doherty
Sinn Fein Finance Spokesperson Pearse Doherty TD has said new figures revealed to him by the Department of Finance show that the abolition of USC as promised by Fine Gael and supported in large part by Fianna Fáil is even more reckless than previously thought. Deputy Doherty said the new figures show that by 2021, USC could be bringing in €5.6bn, €700m more than previously estimated.
“These new figures show that abolishing USC is even more reckless and more dangerous than previously thought. I asked the Department of Finance to calculate the revenue that USC would be raising in 2021. Previously the Department had put the revenue at €4.9bn by 2021 - a massive component of the State’s income to pay for public services.
“However in reply to latest question that asked for the figure based on current government policy, i.e. without tax indexation, the figure provided is €700m higher at €5.6bn. The new figure reflects the fact that it is not government policy to index tax bands and thresholds.
“That is a huge jump and reflects the true potential cost of getting rid of USC. It is not possible to make the investment in the infrastructure and public services we need while abolishing this potential income from USC.
“Both Fine Gael and Fianna Fáil are committed to abolishing or at least severely reducing the USC. They now must answer why they are going to reduce the State’s potential Revenue by up to €5.6bn by 2021 at a time when the economy is screaming out for investment.
“Only yesterday the State received yet another warning from the OECD that investment and not tax cuts is what the economy needs. Populist slogans at election time will not fix Ireland’s still very damaged economy and society - investment and at least maintaining what tax revenue we have are key. It is time for all responsible political parties to either drop reckless promises or else drop any pretence to be interested in investment.”
QUESTION NO: 84
DÁIL QUESTION addressed to
the Minister for Finance (Deputy Michael Noonan)
by Deputy Pearse Doherty
for WRITTEN ANSWER on 01/06/2016
To ask the Minister for Finance further to Parliamentary Questions Numbers 59 and 79 of 26 May 2016, to answer these Questions again using the current parameters within which Universal Social Charge (USC) is charged, to provide for the non-indexation of USC bands and thresholds and to take into account the buoyancy of USC annual receipts over the period, given that USC receipts are forecast to reach €4.9 billion by 2021.
The table below sets out the broad projected revenues that would be generated by the Universal Social Charge (USC) for each of the next five years assuming that no provision is made for the indexation of USC thresholds and bands. It should be noted that for 2017, Exchequer USC receipts are impacted by the carryover effect of Budget 2016 changes and timing effects.
Forecast for USC
*Exchequer receipts basis
With regard to the Deputy's request for an estimate of the individual annual costs of four variations of a 5-year plan to reduce or abolish the USC, taking into account projected buoyancy of USC receipts over the 5-year period, I am informed by the Revenue Commissioners that the information sought by the Deputy is not currently available.
The estimated cost to the Exchequer of the Universal Social Charge (USC) measures suggested by the Deputy in Parliamentary Questions Numbers 59 and 79 of 26 May 2016 were generated using an income tax model maintained for the purpose of estimating the effect of budgetary changes to the income tax system. These figures were estimated by reference to 2016 incomes, using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. I am informed by Revenue that it would not be possible to extend the model to include the ability to forecast over multiple future reference years at the full range of income levels without undertaking an extensive and costly development of the model. However, Revenue are currently preparing the model for reference year 2017 (in advance of Budget 2017) and updates with regard to the year 2017 will therefore be available in due course.