Any cuts to the Universal Social Charge (USC) will leave Ireland “vulnerable and exposed” to future economic shocks, employers’ group Ibec has warned.
The USC has become a hot election topic with Fine Gael promising to abolish the charge if returned to government. Labour wants to scrap the USC on the first €72,000 of income, Fianna Fáil wants to scrap it on earnings up to €80,000 and Sinn Féin wants to remove minimum-wage earners from the USC net.
Speaking in advance of a general election business debate, which Ibec and The Irish Times are hosting on Thursday morning, Ibec chief executive Danny McCoy said the scramble to narrow the tax base by dramatically cutting or abolishing the USC is "a race to repeat past mistakes".
He said cuts to the charge would hollow out the tax system, make it overly reliant on a small pool of tax payers and leave Ireland vulnerable to future economic shocks at a time of heightened global uncertainty.
“We have not learnt one of the really obvious and crucial lessons of Ireland’s economic crash.”
Earlier this month, the International Monetary Fund warned against any USC reductions, saying Ireland must maintain fiscal discipline.
Specific concerns
Ibec will set out a number of specific concerns of business at Thursday’s election debate. As well as avoiding cuts to the USC, the group says the excessively high marginal tax rate should not be a badge of honour, and investment plan need to be more detailed.
“The vilification and repeated targeting of anyone earning over €70,000 smacks of a system that wants to penalise rather than reward success,” Mr McCoy said.
Mr McCoy said investment proposals by the various political parties lacked detail and failed to reflect the acute infrastructure pressures emerging across the country.
“We have a higher education system in the midst of a funding crisis, our national road network is far from complete and no one seems to have a comprehensive solution to the housing crisis. All parties will be earnestly advocating the need for more investment, but they should be judged on the credibility of specific proposals,” he said.
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