Government officials have rejected Sinn Féin claims that Cabinet is considering hiking property tax by 600% in order to scrap the Universal Social Charge, saying they have “absolutely no intention” of doing so at any stage in the future.
The denial was issued after Sinn Féin TD Pearse Doherty obtained an internal Department of Finance briefing document outlining the potential move and a series of other measures if USC is removed in a single budget.
The file, received under the Freedom of Information Act, states that in the event of the new Government choosing to remove USC completely in one budget, it would have to consider hiking property tax by 600% in order to balance the books.
The report also suggested increasing commercial property stamp duty by 1.75%; stamp duty by 3%; raise capital gains tax to 38%; and increase capital acquisitions tax from 33% to 43%.
In addition, it has also suggested alternatives such as increasing the price of petrol and diesel by 18c per litre; the price of a pint by €1.50c; the re-introduction of a 13.5% VAT rate for the tourism sector; and a 5% hike on children’s shoes.
Outlining the scale of the situation, Mr Doherty, SF’s finance spokesperson, said it is clear the promise to remove USC was only made to win the recent general election and it would be “reckless” to do so now, adding: “It simply doesn’t add up.”
However, in separate statements responding to the claim, the Department of Finance and Fine Gael TD Noel Rock denied the Government has any intention of removing USC in one budget as outlined by the document.
“The tax paper released under this FOI request predates the Programme for Government. The paper is not relevant in the present context,” a department spokesperson said.
“The Government never intended abolishing in USC in one go. The plan is to phase out the USC. This policy has been ongoing now for the last two budgets where we began this phasing out process. There is absolutely no intention to increase property tax in the forthcoming budget.”
Dublin North West TD Noel Rock was similarly critical, describing the claims as “disingenuous nonsense”, as they are based on suggestions USC will be scrapped in one budget instead of over a staggered period of time.
“What is being proposed is the gradual phasing out of the hated USC on lower and middle-income earners over the course of five years.
“This will not involve invoking any of the hypothetical taxes raised by Pearse Doherty, as the economy will have improved sufficiently by then to find the funding elsewhere.
“The reality is that the economy has improved by record numbers under Fine Gael, and we will use these hard-earned gains to reduce the burden of the hated USC.
“Sinn Féin, meanwhile, have no plan, and instead base their soundbites on misleading hypotheticals: shame on them,” he said.
There are ongoing concerns among economists over whether the complete removal of USC can be achieved by the end of the decade as promised.
This is because of the potential hollowing out of the country’s tax intake such a move may cause, and the fact it remains unclear what impact the recent Brexit vote in Britain will have on the Irish economy.
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