Finance Minister Michael Noonan has said the decision to reduce the universal social charge (USC) is a political one, despite mounting calls for the tax to be retained. Mr Noonan was speaking at the Dáil’s new Budget Oversight Committee and restated his intention to phase out the USC by 2021.
“You [the committee] have heard many opinions, and those opinions should be valued but there are other opinions as well. Political parties have felt the USC should be reduced,” Mr Noonan said.
As reported in the Irish Examiner yesterday, the European Commission in its latest report on Ireland’s economy, warned against abolishing the USC which at its height brought in more than €4bn to the exchequer.
Many economists, trade unions and even officials in the Department of Finance have also warned against phasing out the USC.
Mr Noonan said the budget will be cautious and careful saying taxpayers “will not be throwing their hats in the air” on Budget day, which he confirmed would be October 11.
Dramatic corporation tax revenue spikes in 2014 and 2015 were caused by increased profitability of a small number of companies and some currency fluctuations affecting those firms, Gerry Howard of the Revenue Commissioners said.
During testy exchanges, Mr Noonan fresh out of hospital after contracting a facial infection, rounded on Sinn Féin’s Pearse Doherty, who challenged his plans to cut taxes. Mr Noonan told Mr Doherty not to be “so haughty” in his criticisms. Mr Doherty said he was well within his rights to ask questions about policies which wrecked the country, a reference to his criticisms of previous Fianna Fáil ministers.
Mr Noonan said republicans had over 30 years done their best to wreck two economies. Meanwhile, tax revenues were running at €449m ahead of target at the end of August, Mr Noonan has said.
This means the Government took in €1.7bn more in the first eight months of 2016 than it did in 2015, he said.
Mr Noonan restated that the amount of additional spending available for the Budget will be around €1bn, despite increased economic uncertainty following the Brexit vote. He said the extra money will be split on a 2:1 basis between spending increases and tax cuts.
He said he and the Government are not complacent to those external risks and said the mistakes of the past will not be repeated.
Scrapping Vat on condoms would not help reduce instances of sexually transmitted diseases, Mr Noonan said in response to questions from Fine Gael TD Kate O’Connell.
Shutting down tax breaks to vulture funds could double the available ‘fiscal space’ from €1bn to €2bn for next year, the committee heard. The State could gain €10bn to €20bn if such loopholes are closed over 10 years, it was claimed.
Independent TD Stephen Donnelly posed the question to Finance Minister Michael Noonan at the committee, calling for a closing of loopholes relating to capital gains tax which such funds benefit from. Mr Donnelly said US fund Cerberus will walk away from its purchase of Nama’s Northern Ireland loan book known as Project Eagle about €2.8bn better off because of the tax breaks.
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