herald

Thursday 8 December 2016

Hated USC to be axed in 2020 as Coalition set to unveil its final Budget

Minister Frances Fitzgerald
Minister Frances Fitzgerald

The deeply unpopular Universal Social Charge (USC) will be axed in 2020 as the Coalition pledges to boost the pay packets of every worker in the State over the next five years.

The 'Big Bang' USC cut in tomorrow's Budget will be accompanied by a €200m childcare package and a series of sweeteners for the elderly, farmers and the self-employed.

Tanaiste Joan Burton is expected to secure a beefed-up Christmas bonus of at least €138 for a single person and €264 a couple, while Justice Minister Frances Fitzgerald has secured funding for special surveillance operations aimed at tackling the rural crime epidemic.

But significant cuts to USC, which will be followed by the abolition of the tax in 2020, will form the centrepiece of the Coalition's final budget before the General Election next spring.

Government sources last night said changes to the individual USC bands and thresholds will see every worker in the State pay less income tax in 2016.

And the point at which workers begin paying USC will be increased by €1,000.

Income tax rates and the point at which workers enter the tax bracket will remain the same.

But sources said the overall tax plan will see the marginal rate of tax reduced to 49.5pc for the first time.

Pledge

As well as assisting those at home, the Coalition will claim that its decision to axe USC will entice 70,000 emigrants home over the next five years. It will be coupled with a pledge to reduce unemployment to 6pc by 2020.

"By cutting taxes on work and encouraging entrepreneurship, phased abolition of the USC will support achievement of our target of replacing every job lost by Fianna Fail by 2018, getting the unemployment rate down to 6pc by 2020, and bringing home 70,000 emigrants during the life of the next Dail," said a senior Government source.

"It will keep Ireland competitive for mobile investment and skills, particularly as other countries seek to emulate our low rate of corporation tax. It will be accompanied by other tax measures to cap the benefits for the highest paid."

Government sources said Mr Noonan will also pitch his Budget as being aimed at the country's "next generation".

The delivery of two years' free pre-school has also been agreed with parents set to be given three separate windows during the school calendar to enter into the scheme.

Two weeks paid leave for fathers will be rolled out from September, while a €5 child benefit hike will be announced by Brendan Howlin.

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