Reaction to the Budget announced yesterday continues to emerge – The Rural Independents are critical of the failure to remove the Universal Social Charge(USC) tax – the government did reduce the top rate from 4.5% to 4%. Deputy Mattie McGrath says “the Budget overlooks the persistently elevated income tax rates endured by the working class and fears that the USC, initially introduced as a temporary measure, now appears deeply entrenched.
The USC is a tax on income that replaced both the income levy and the health levy (also known as the health contribution) on 1 January 2011. People pay USC if their gross income is more than €13,000 per year. USC does not apply to social welfare or similar payments. Between 2011 and 2013 the tax was levied on all income above €4,004. The tax raises approximately €4.4B for the State.
The Budget also includes an increase in Pay Related Social Insurance(PRSI) due to come into effect in October next year. PRSI will increase by 0.1%.
“This measure, which will raise €240m in a full year, is a modest but necessary step to secure pension entitlements for this and for future generations” according to Paschal Donohoe Minister for Public Expenditure and Reform.
