IBEC calls for the USC to be retained, and for top marginal tax rates to fall

The group says that getting rid of the USC would be a step in the wrong direction...

IBEC calls for the USC to be retained, and for top marginal tax rates to fall

File photo | Image: Niall Carson / PA Archive/Press Association Images

Irish business group IBEC has argued that the universal social charge (USC) should be retained and that more workers should be brought into Ireland's tax net.

Its election taxation submission says that tax on work is too high and that not enough people are paying taxes.

As part of its campaign, Fine Gael has promised to abolish the tax by 2020. The Labour Party wants to abolish the charge for low and middle-income earners. Sinn Féin believes that minimum wage earners should not pay the tax while Fianna Fáil wants to reduce it.

The USC was initially introduced as an emergency measure during Ireland's economic crisis. Some €4bn in revenue is raised by the charge for the State.

IBEC's General Election 2016: Rethinking the Tax Debate says that between USC, PRSI, VAT and income tax the marginal rate of tax paid by Irish workers is over 65% - it wants to reduce that figure to 45%.

The report states, "Abolishing the USC would be a step in the wrong direction to a more efficient tax system, given that it is the most efficient of taxes, captures a broader base of income and is the only tax on income a large proportion of workers’ pay."

It continues - "Its abolition would narrow the tax base even further, putting more pressure on smaller numbers of people for the total income tax take."

The group also says that a proportion of the USC should be converted into a universal pension scheme during the life of the next government.

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