“Stop saying the universal social charge (USC) is likely to go. It will never go...”
IT WAS the summer of 2011 and I was stopped by a senior finance official on my way into a press conference at Government Buildings.
“Stop saying the universal social charge (USC) is likely to go. It will never go,” he said.
Stunned, I asked, “Why?”
“We [the department] love it as a tax. It brings in more than €4bn and hoovers up so much from so many, it is easy to apply,” the official told me.
It was like a clarion call, particularly in those heady days as the new Fine Gael-Labour government was still bedding into office and beginning to turn to its first budget.
Despite the enthusiasm of officials within the Department of Finance for the USC, Fine Gael — led by Enda Kenny and Michael Noonan — set their minds to rid the country of the “most hated tax in history”.
Fine Gael, in published documents, said the USC was essentially the last act of a failed Fianna Fáil government before it was booted from office.
The party began the incremental reduction of the USC before the 2016 general election and hoped its promise to abolish the USC by 2021 would secure a successful re-election.
Between them, Fine Gael and Labour lost 57 seats and a greatly weakened Kenny and Noonan clung on to power by forming a dysfunctional minority government.
The public it seems, strangely enough, did not want tax cuts. They instead wanted services restored and Fine Gael has been left scratching its head ever since.
During his leadership bid, Leo Varadkar made a virtue of keeping the USC and merging it with PRSI.
The commitment was somewhat dismissed as election rhetoric and that was that.
But then, in the Dáil on Wednesday last, Finance Minister Paschal Donohoe delivered the confirmation the USC is not to be abolished but, in fact, it will be maintained and will be merged over time with the PRSI.
“Our current system of personal taxation is overly complex. It can be difficult for individuals to understand the personal tax system. The proPramme for Government commitment to the phasing out of the USC was specified as part of a wider medium-term process of income tax reform,” the minister said in exchanges with Deputy Pearse Doherty.
“My long-term view of the USC is to see its integration into the existing PRSI code. My focus on reducing the income tax burden for those on low and middle incomes should be the guiding principle,” Mr Donohoe added.
Under fire amid charges of U-turns, Mr Donohoe sharply hit back at Mr Doherty: “I am very clear on what the long-term endpoint will be for the USC. We have a new minister for finance and a new Taoiseach. We are entitled to make our assessments of the landing points for important policy areas such as this. We believe the landing point is where we integrate the PRSI code into the USC code.
“I have outlined to the deputy my view and the Taoiseach’s view on the long-term role of the universal social charge. It should be at the heart of a new social contract between our citizens, through how we integrate it into the PRSI code. The views regarding how we make our tax code more competitive and how work is rewarded of course will be handled in a way consistent with the Programme for Government and consistent with the supply and confidence agreement we have with Fianna Fáil,” he concluded.
Mr Doherty was having none of it, going as far as to describe it as the “biggest U-turn in my lifetime”.
“It’s the biggest U-turn I’ve ever seen, but we welcome the fact that the penny has dropped. Dropping the USC was a populist policy by Fine Gael to try to win votes,” he said.
So, just when is a U-turn not a U-turn, that is the question?
Mr Donohoe’s midweek confirmation made front page news, including in this newspaper on Thursday morning and it was the issue that dominated the airwaves throughout the day.
“It is not going back, it is changing,” Social Protection Minister Regina Doherty told a fiesty Cormac Ó hEadhra, who was standing in for Sean O’Rourke on RTÉ Radio on Thursday morning. Ms Doherty rejected the claim later on Thursday: “It’s not a U-turn if it’s the right decision to make better services.”
Dogged and determined in his questioning of the minister, Ó hEadhra demanded to know how Fine Gael can be trusted if it can do something like this.
“It’s not going back, it’s changing. You’d have to delve into the reasons why it’s changing,” she said in response. She said she was not aware where the term “U-turn” came from.
“We have a new leader, in his manifesto for leadership of the party he clearly stated that he would explore reinvesting the USC into society, into communities, into new services. That’s what’s being done now by a Government and a new leader, by a new Taoiseach. Things change according to responses, according to the times, according to economies presented to the government, and how they ebb and flow.”
Ms Doherty said she had not forgotten the very clear message that people gave on the doors prior to the last election: “They want money invested in services — that’s what we’re doing now.”
She said: “You can’t expect things to be exactly as they were when you have a new driver behind the bus. Leo Varadkar has listened very carefully to what the Irish people have said.
“I have no issue with changing plans according to people’s needs. If you want to be trite and dismiss it as a U-turn that is fine, but we have a new leader and you cannot expect things not to change,” she said.
So that’s so, but being surprised that politicians lie to us is always going to end in disaster.
New Politics, my foot.
I will return to this more comprehensively when he finally exits stage left in a few week’s time but, at this stage, I want to pay tribute and acknowledge the contribution to Irish public life of Vincent Browne. His departure from our screens at the end of the month was confirmed this week following media reports last weekend.
A true legend of Irish journalism, he many times put his own money where his mouth was, not always successfully, but he is and has been a pioneering force for good.
Having appeared on his TV3 show countless times over the past decade or so, I can say every time before the red light went on, a sense of dread would consume you.
Once, or twice, I found myself in the crosshairs. But he commanded the respect of his peers and, more importantly, the public.
He afflicted the comfortable when it was neither popular nor convenient and it is now as he is departing that we can fully assess his impact.
I thank him for the courtesy he has shown me personally on all occasions and I want to wish him well on his retirement.
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