Fixing USC ‘anomaly’ could raise €70m for exchequer

Fixing an “anomaly” in the universal social charge system could raise more than €70m for the exchequer and shift more of the tax burden to the wealthy, a Labour TD has said.

Arthur Spring, who is also a member of Oireachtas finance committee, said the USC should be “made more progressive” by extending the 3% surcharge to all income over €100,000.

All individuals are liable to pay the USC at varying rates if their gross income exceeds €10,036 a year.

But there is a 3% surcharge on individuals who are self-employed and earn more than €100,000 a year.

Mr Spring says the surcharge should be widened from the self-employed to all individuals on six-figure incomes.

Figures provided to him by Finance Minister Michael Noonan in a parliamentary response indicate that such a move could raise €71m in additional tax for the Exchequer.

“Addressing the USC anomaly, where the 3% surcharge is currently targeted solely at the self-employed over €100,000, would allow the Government to achieve a more appropriate contribution from the highest earners in society,” Mr Spring said. “This is an issue of solidarity, and my proposal would help shift the burden of the USC to higher earners.

“In last year’s budget, 330,000 of the lowest-income earners were taken out of the USC. Focus must now turn to higher earners. What is needed is to make the tax more progressive at the top, by applying the 3% surcharge to all incomes over €100,000, gaining €71m for the Exchequer.”

In his response, Mr Noonan said the €71m was an estimate using 2010 data.

“It is, therefore, provisional and likely to be revised,” Mr Noonan said.