Fine Gael is pushing for a one percentage point reduction to the Universal Social Charge in next October’s budget in talks with Independents as part of government formation talks.
Several Independents were adamant that such a generous cut to the USC can only be considered if all of their issues are addressed first.
Several Fine Gael ministers, speaking yesterday to the Irish Examiner, confirmed that the party won 50 seats on a promise to abolish the USC, while Fianna Fáil also sought to have it abolished for earners up to €80,000.
The ministers added that it now no longer is seeking the tax’s total abolition for everybody but that it would work towards getting rid of it for income earners up to that €80,000 level.
One minister said that tax revenues are positive and it is looking like there could be at least €1bn in additional spending for the government come budget day.
“We won a mandate to reduce USC and that remains our focus and desire. Given the so-called fiscal space has increased from €450m to €900m, we believe there will be enough to deliver on that,” the minister said.
Fine Gael ministers will convene in Government Buildings today to meet members of the Independent Alliance, with whom they have been engaging with over the weekend.
Key ministers such as Simon Coveney, Paschal Donohoe, and Michael Noonan will be available tomorrow to help address concerns raised by the Independents, whose support Fine Gael needs to form a government.
However, while there is unanimity on the issue of the USC, some disagreement is emerging between Fine Gael TDs on whether or not water charges will be reimbursed.
The party has agreed a three-budget deal with Fianna Fáil and is expected to take office as a minority government this week. A vote will be held on Wednesday to elect a Taoiseach.
As part of the deal, water charges are being suspended for at least nine months and there are calls within Fine Gael for the fees to be reimbursed to those who paid.
Environment Minister Alan Kelly said: “If charges are abolished, people are entitled to a refund.”
However, Fine Gael’s Regina Doherty disagreed with reimbursing those who have paid.
“My mindset is about reintroducing the suspended charges, so my answer would be no,” she said. “They are law-abiding citizens who abided by the law, and those who did not will be pursued.
Ms Doherty said she believed the charges would be back within 12 to 18 months.
Fianna Fáil’s stance on refunds is not yet clear. Party negotiator Niall Collins said: “All I can say is water charges have been suspended and it will be a matter for Dáil Éireann to reinstate water charges if a vote is taken.”
Anti-Austerity Alliance TD Paul Murphy questioned whether a Fine Gael-led minority government would be stable.
He also called for all those who paid water charges to be reimbursed, now that a suspension of at least nine months of charges has been negotiated.
“We think anybody who paid water charges should now be refunded,” he said.
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