While Fine Gael committed to axing the USC in its pre-election promises, Micheál Martin said it would not make sense.
In an interview with the Irish Examiner, Mr Martin vowed not to pull down the confidence and supply agreement when a new leader of Fine Gael is selected — whether that be Leo Varadkar or Simon Coveney.
He has put it up to whoever does go on to become leader by stating that the Government has already “breached” the confidence and supply agreement and this will not be tolerated.
Mr Martin made it clear that the agreement to prop up the Fine Gael-Independent Alliance minority Government is “not personality driven” and is instead based on “policies and principles”.
He said: “We had always factored in the idea that there could be a change in the leadership. Enda Kenny himself said that he wasn’t going to go the full distance.
“So that was always factored into the agreement, it’s not personality driven, so the leadership of Fine Gael is a matter for the Fine Gael party.”
Mr Martin warned that the confidence and supply agreement is about “the issues and the commitments”, and that those commitments must be fulfilled if the Government is to retain support from his party.
He said some promises set down in the agreement have already been broken.
“We feel Government has essentially breached the confidence and supply [deal] on mental health,” he said. “We have had talks with the Taoiseach on that. They haven’t given us sufficient funding as per the agreement in terms of implementing vision for change.”
Mr Martin said there had also been “an unnecessary dragging of the feet” on the restoration of guidance counselling, adding: “They are niggling issues.”
Turning to the USC, which Fine Gael promised to abolish, Mr Martin said: “This is a very interesting point. People accused us of populism on water; the water charges regime lost money. Getting rid of USC would cost about €4bn.
“Now I ask you this question and I ask a lot of the media commentators this as well: Which would be the more fiscally irrepressible?”
Putting an end to the USC was a central element of Fine Gael’s election manifesto last year. Mr Kenny’s party had pledged to abolish the charge completely over four budgets.
However, the confidence and supply agreement signed up to with Fianna Fáil states that reductions in the USC during the lifetime of the Government must be done on a fair basis with an emphasis on low and middle-income earners.
During his budget speech last year when the first cuts were introduced, Finance Minister Michael Noonan said he was “intent to phase out the USC over time, as resources permit”. These measures will face major opposition from Fianna Fáil.
Mr Martin said: “There is no question abolishing USC is probably the biggest electoral promise ever made by any party and that was made by Fine Gael in the last election.
“Given all the challenges we have in health and education, abolishing it — you can reduce it, certainly — but abolishing it doesn’t make sense and that revenue, in my view, is needed.
“I think it’s a bit like universal health insurance that Fine Gael told us we would have five years ago and proved to be another reckless and ill-thought-out policy.”
Mr Martin said other issues such as Brexit would have to be first accommodated in October’s budget.