FG is willing to scrap USC pledge - if FF backs down on water charges
Fine Gael is willing to abandon its pledge to scrap the Universal Social Charge (USC) if Fianna Fail rows back on plans to scrap water charges, sources have said.
There is a growing mood among TDs in both parties that their leaders, Enda Kenny and Micheal Martin, will have to meet before the Dail sits again on April 6 to discuss whether it is possible for a second election to be avoided.
The issue of water bills is now seen as the major block to Fianna Fail facilitating a Fine Gael-led minority administration.
Mr Martin's party are adamant they will need a binding agreement with Fine Gael that water charges will be suspended for up to five years if they are to allow Mr Kenny become Taoiseach.
Sources in Fine Gael have said major changes to the structure and operation of Irish Water were not an option.
But in the first sign of a potential trade-off since the election, sources have now said that Fine Gael would be willing to drop its plan of scrapping the USC over the next five years.
A senior Fine Gael source said that the election result proves that its promise to ending the USC was entirely "out of touch" with the concerns of families, who instead want a greater focus on public services.
Fianna Fail's USC proposals were more modest and allowed for the scrapping of the tax on incomes of up to €80,000 - but those earning above this level would still have to pay, albeit at a reduced rate.
"This could be one area of compromise," said a minister. "We'll support your USC proposals - but you must row back on water."
Fine Gael has already indicated that tax policy will form part of the negotiations under way with 15 Independent TDs and the Green Party.
Personal tax rates and the future of the USC were listed among 86 items up for debate on a document circulated to those who attended a meeting in Government Buildings last Thursday.
The same list makes no mention of water charges, suggesting that only "water management" is an issue for discussion.
Fine Gael is determined not to suspend charges or abolish the utility - the two central planks of the Fianna Fail policy - for fear it would bring the party into "meltdown".
The party leadership believes it has the full backing of the parliamentary party and their grassroots when it comes to the principle of water charges.
A Fine Gael strategist last night said the party would "budge somewhat" and would potentially support a rebranding of the unpopular public utility.
But in relation to charges, the senior source said the majority of Fine Gael voters have paid their bills and to ignore that would prove "catastrophic" for the party.