Siptu boss: Ending USC not ‘fanciful’

The statement by former Labour cabinet minister Pat Rabbitte that abolishing the universal social charge (USC) is a "fanciful" notion has been attacked by Siptu president Jack O’Connor.

Mr Rabbitte made the claim after demands from Labour and some Fine Gael TDs to lessen the impact of the tax, which was imposed at the height of the financial crisis during the previous Fianna Fáil/Green administration.

Sources close to Tánaiste Joan Burton said the Labour leadership broadly agreed with Mr Rabbitte’s analysis, as their aim was to reform the levy, not extinguish it.

Mr Rabbitte rounded on Mr O’Connor by insisting it was “fanciful” to abolish the charge, as it delivered €4bn in State funding a year.

Former labour leader Mr Rabbitte was responding after Mr O’Connor said the union’s support for Labour could not be taken for granted if the universal social charge is not scrapped.

“It is a huge revenue earner, it brings in €4bn,” Mr Rabbitte told RTÉ. “This Government has taken 410,000 people out of the universal social charge but the notion that you can abolish it at a stroke is, I am afraid, fanciful.”

Mr O’Connor hit back by saying that Mr Rabbitte had misunderstood the union’s intentions after it pledged to make abolition of the tax a key issue at the next Labour Party conference.

“We are calling for the gradual abolition of the universal social charge in stages. We are aware it brings in €4bn in revenue each year and we are not saying the State should do without that.

“We are saying it should be replaced by another, more progressive form of taxation on people who are wealthier of who have higher incomes,” Mr O’Connor said.

The trade union leader told the Irish Examiner that if there was any scope for reducing the tax burden it should be used to lessen the impact of the universal social charge on lower income earners, not cutting the top rate as Fine Gael favours.

Mr Rabbitte also dismissed talk the Government was planing to bring in a mini-budget in the spring to spread ‘feelgood’ news ahead of the next general election.

Fianna Fáil senator Averil Power said such a move would plunge the country back into the “auction politics” that did so much damage in the past.

“I think it has become increasingly clear that Fine Gael and Labour are more interested in electioneering than actually running the country,” said Ms Power. “I think talk of an early budget, and them arguing amongst themselves over whether they would cut the USC or top rate of tax again is also highly reminiscent of the auction politics we saw at the last election.”

Mr Rabbitte also turned his fire on the suggestion that a raft of new parties could solve Ireland’s social and economic problems.