Give workers €775 credit as part of new USC: Siptu

The largest trade union in the country wants the government to give workers a new tax credit valued at €775, which would return money to them paid out of their universal social charge (USC) contribution.

Siptu president Jack O’Connor made the call yesterday as he outlined proposals to overhaul the much-hated USC, replacing it with a more transparent, fairer and dedicated levy.

The new charge would be called the Social Solidarity Contribution and would see contributions ringfenced for health, childcare, education and eldercare, as well as providing for the housing needs of all the population, among areas, SIPTU said.

The union’s proposals were previously outlined and backed by Labour at its conference last February. Mr O’Connor said that, since then, he had not discussed the potential changes with the party, but that the union now wanted its proposals considered for the budget.

Both Taoiseach Enda Kenny and Tánaiste Joan Burton have promised to reduce the USC in the next budget, their last before the general election. This could involve reducing the 7% rate by 1% or 2% for those earning less than €70,000.

However, Mr O’Connor said his union did not want changes to the bands or levels of the USC, but a universal credit introduced for all workers.

“We do not think that any money should be spent on the rates or the bands, we think that any money that is available should be spent on introducing a credit and it should be the same for everyone and it shouldn’t apply to anyone earning over €100,000,” said Mr O’Connor.

“It should be designed as far as possible that people up to a living wage are helped most. It should not repeat the mistakes of the last budget, where two thirds of the last budget, where two thirds of the resources that are available, were concentrated on 12% of earners.”

The key proposal by Siptu would see workers receive a €775 credit, along the lines of the existing PAYE tax credit. The Social Solidarity Contribution, in the long run, would also not go into central exchequer funds, with the €4bn revenue generated instead directed specifically to improving healthcare, education, training and childcare, among other areas.

Mr O’Connor said the proposed SIPTU changes would give people greater confidence in the tax system and make the USC successor more transparent for workers. SIPTU will further discuss parties supporting the measure, or not, at its October conference.

Meanwhile, Labour leader Ms Burton yesterday said she had held a number of conversations with Mr Kenny about when the election would be held.

She said they agreed that the Coalition would see out its full term, until next spring, and she indicated that Labour wanted to reduce taxes and return some welfare payments, as the economy recovered.

She defended cuts to lone-parents’ allowances, which will hit some 10,000 people this week, saying they would benefit from changes through alternative supports and that the Government would help them return to work or get more hours of employment.