The universal social charge (USC) is “an important way in which we collect tax” and will be necessary to retain as the Irish economy comes under “many pressures”, Minister for Finance Paschal Donohoe told a Dáil committee considering the Finance Bill 2022 on Thursday.
“I think we’re going to need it in the future,” said Mr Donohoe who, along with his Fine Gael colleagues, made the abolition of the USC one of his 2016 general election pledges.
The Minister told the Select Committee on Finance, Public Expenditure and Reform that he was not going to bank on additional growth paying for structural changes such as abolition of the USC “because of the volatile and changing world that we’re in”.
“I had a view in 2016 that we were going to go back to a degree of economic and political normality. I didn’t think we were going to move into a world in which Brexit was going to happen, and that we were going to see such changes that have happened in global and American politics,” he said.
“That has made me even more aware that small, open economies like Ireland have to be able to balance our books. I believe therefore that the policies that I am advocating now are appropriate in a world that has changed.”
Is the tech crunch a correction or a calamity?
The job losses announced by Meta and Stripe may provide an indication of layoffs across the tech sector. Inside Business is analysing the impact of the redundancies, announced over the past week, across the wider Irish economy. After enjoying bumper profits and a surge in recruitment during the pandemic, interest rate rises and the cost of living crisis have finally caught up with the tech giants. But is the crunch merely a recalibration of the sector or a more foreboding warning of global recession? Ciaran Hancock, Cliff Taylor and Laura Slattery analyse how prepared we are to absorb the losses, what the impact on the commercial property market will be and does the IDA have a Plan B should the multinationals pare back significantly.
Income tax receipts are exposed to the wave of tech sector job losses now under way and expected to continue in the coming months.
Mr Donohoe also said he would not back a call for a higher tax for higher earners because he believed it would harm the State’s ability to retain multinational employment in light of international competition for foreign direct investment.
“My view is that if we were to give an indication that there was going to be an increase in personal tax for incomes above a certain level, I am convinced that would affect our ability to keep those jobs here in Ireland.”
Meanwhile, the Department of Finance has said a new tax scheme aimed at incentivising landlords to undertake retrofitting works to improve the energy efficiency of their properties will support the “continued participation” of small-scale landlords in the Irish rental market.
The new tax deduction will provide renters with a €10,000 per property tax deduction against rental income for certain retrofitting expenses for a maximum of two properties.
Designed to supplement the Sustainable Energy Authority of Ireland’s (SEAI’s) home energy grant scheme, the deduction is contingent on the property owner having received a grant for the same retrofitting works and can be applied against any expenses covered by the SEAI scheme.
To qualify, landlords must be tax-compliant and registered with the Residential Tenancies Board, the department said on Thursday, and the property must remain a rental property for at least two years after the work has been completed.
