“We have to be honest with people.”
Taoiseach Micheál Martin has said that his Government will not abolish the Universal Social Charge (USC) amidst fresh debate about the rising cost of living in Ireland.
In conversation with Matt Cooper on The Last Word on Today FM on Monday evening (14 February), the Taoiseach began by noting that last week’s announced measures to tackle increasing inflation aren’t going to fully solve the problem.
“A package like this was never going to alleviate the entire situation for people,” he said.
“What we’ve endeavoured to do is to do the best we can to give some alleviation to as many people as possible while doing initiatives that align with Government policy, as well.
“We will never be in a position to 100% offset the inflationary impact on people,” the Taoiseach added a little later.
“But what we are endeavouring to do, through a €505 million package, is give some alleviation to people as best we can.”
Asked about the Universal Social Charge and if there is any chance of it being abolished or reduced, the Taoiseach quickly quashed the notion of the former.
“It will not be abolished,” he said.
“We have to be honest with people. All of the time, there are increasing demands on public expenditure. The last two years have seen an unprecedented intervention by Government, by the State, in the economy, underpinning wages, underpinning employers in terms of the EWSS scheme to keep employees linked with employers.
“And likewise with the CRSS scheme in tourism and hospitality, [and] the Pandemic Unemployment Payment.
“It has been quite unprecedented,” Martin continued.
“We’ve borrowed a lot to do that. Thankfully, it’s been the correct policy and the economy has rebounded. We’re nearly close to full employment.”
Last week, Minister for Finance Paschal Donohoe claimed that he never said the USC would be a temporary measure, despite Fine Gael going on record in 2016 with the promise to abolish it.
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.
We will abolish the USC. This will keep the recovery going and ensure that work pays. #GE16 pic.twitter.com/xNtyRfK5Gn
— Fine Gael (@FineGael) February 7, 2016
“I never said the Universal Social Charge was temporary,” said Donohoe while speaking on Friday morning’s edition of Newstalk Breakfast. “That is never a point I’ve made,” he added.
“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 that the USC is permanent, Donohoe replied that it will “remain part of our taxation system”.
“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,” said Donohoe.
Featured Image via Julien Behal Photography / RollingNews.ie
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