The only meaningful economic relief that can be given to squeezed lower and middle income earners is to cut the “very unfair tax” Universal Social Charge.
This is the view of Independent Galway West TD Noel Grealish who, in his pre-Budget submission to the Minister for Finance Michael Noonan has requested the USC be reduced rather than any increase tax credits, as the latter move, he believes, only has “a limited effect on a person’s wages”.
The USC, introduced in 2011 as a temporary emergency tax and now synonymous with the recession, is paid on gross income begins at a much lower income than PAYE. The highest rate of USC applies on all income over €16,016 a year.
The Carnmore based TD said that at its current rate, the USC is a “massive burden on lower and middle income families”.
He pointed out that anyone earning more than €32,800 pays a marginal rate of tax of 52 per cent of their income, “which is a huge burden on a very average wage”, and that this consists of 41 per cent income tax, seven per cent USC, and seven per cent PRSI, and “does not factor in all other tax increases and new taxes introduced over the last couple of years”.
Dep Grealish said people on low to middle incomes have “contributed the most to help get our economy back on track and it’s time that they are rewarded”.