Paschal Donohoe claims he never said USC was temporary... despite Fine Gael promise to abolish it 11 months ago

Paschal Donohoe claims he never said USC was temporary... despite Fine Gael promise to abolish it

In 2016, Fine Gael pledged to abolish the Universal Social Charge. It still exists...

Finance Minister Paschal Donohoe has claimed he never said the Universal Social Charge (USC) was temporary.

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The Minister and Fine Gael politician made the comments following the Government announcing new measures this week designed to tackle the cost of living.

These include a 20% reduction in public transport fares, a change in the Drugs Payment Scheme and a cash saving of €200 on every household's electricity bill, regardless of income.

Appearing on Newstalk Breakfast on Friday, Donohoe said he believes the new measures would help families facing challenges due to high living costs.

However, towards the end of the interview, the Minister was asked why no changes were made to the USC, given it was introduced as a temporary measure.

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The USC was introduced in 2011 as a response to the economic crisis and was brought in by then Minister for Finance, Fianna Fáil’s Brian Lenihan.

“I never said the Universal Social Charge was temporary. That is never a point I've made," Donohoe replied.

“If you look at the Universal Social Charge, the Universal Social Charge involved the integration of two levies - the health and income levy - which were longstanding parts of our personal tax code at that point."

Asked if this meant the USC is permanent, Donohoe replied that it will "remain part of our taxation system".

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"Anybody who indicates to you that at this point, particularly with €234 billion of national debt post-Covid, that we can now remove Universal Social Charge needs to explain how we will find the many other billions that it collects every year," he added.

"What we can do and we are doing is, year by year make sensible and make affordable changes to the amount of income that you pay the lower rates of Universal Social Charge and the lower rates of personal tax on.

“We need to be careful that Government doesn’t do things that ultimately it can’t afford.

“Massive unfunded changes in how we tax at the moment will create problems for us that we'll all be dealing with in a year or two... I'm trying to get that balance right.”

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Presenter Ciara Kelly then highlighted to Donohoe how the understanding among much of the Irish population is that the charge is a temporary levy.

“I never said it was temporary... I'm not saying ‘now’ it's permanent," the Minister responded.

"I've always said that to remove the Universal Social Charge, particularly since I became Minister for Finance with what happened with Brexit and now where we are with Covid, isn’t a feasible prospect.

"What we can do is we can reduce the amount of income in which you're paying the higher rates of USC and the higher rates of personal tax.

"My own party and Government are committed to doing that.

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“At this point in time, to be indicating that we can abolish Universal Social Charge with where we are, in particular with Covid, is not a claim that I believe you can make, let alone implement.”

In the run-up to the 2016 general election, Fine Gael had said it would abolish the USC over the lifetime of the next Government.

Main image via Leah Farrell/RollingNews.ie