Under the new arrangement, workers with annual earnings under €10,036 will no longer have to pay the USC, whereas currently those with earnings under €4,004 are exempt.
This will benefit 330,000 workers in low-paid sectors or in part-time or seasonal jobs, although the saving to them will amount to just €200 per year or €4 per week.
That saving amounts to the same figure a family with three children will lose in reduced child benefit next year, and it will not compensate for losses such as reductions in jobseekers’ benefit for part-time workers, cuts to the back to school allowance and changes in the way the one-parent family allowance and family income supplement are calculated.
Children’s charity Barnardos said those on the minimum wage would still pay the same percentage of USC as those earning €100,000 per year.
Chief executive Fergus Finlay said: “Despite the increased exemption level in USC, Budget 2012 has failed to adequately redistribute limited resources in a fair way. More could have been done to protect the most vulnerable families.”
The Mandate trade union also said the changes were not sufficient to tackle the unfair nature of the USC. “We believe they should have gone much further and set the threshold at €16,016 per year or €308 per week,” said general secretary John Douglas.
“Unfortunately, the current Government has missed the opportunity to right the wrong done by the last Government and give lower paid workers a significant break at this difficult time.”
Taking the 330,000 workers out of the USC net will cost €47 million but Finance Minister Michael Noonan said changes to the way the charge was collected would offset that cost.
Currently USC is deducted on the basis of the first week’s earnings even though many part-time and seasonal workers have weekly wages that fluctuate throughout the year.
It will now be collected on a cumulative basis calculated on real-time earnings in any given week so that there should be no backlog of adjustments to be made.
Mr Noonan said the exemption increase would benefit workers people in hospitality and farming.
The economic think-tank TASC described the USC change as progressive but also stressed that many low income households would still be worse off as a result of the complete budget package.
Director Nat O’Connor said: “This reinforces TASC’s long-standing recommendation that all budgetary measures be subjected to equality-proofing prior to implementation, and equality auditing after implementation.”