Politics

Noonan confirms Budget cut to USC of at least 1 per cent

Minister wants more people to go to work and return home

Minister for Finance Michael Noonan. Fil photograph: Eric Luke/The Irish Times
Minister for Finance Michael Noonan. Fil photograph: Eric Luke/The Irish Times
Thu Jul 09 2015 - 14:48

Minister for Finance Michael Noonan has pledged to cut the Universal Social Charge in the upcoming Budget in October.

Mr Noonan said he would cut the USC by at least one per cent.

"I use the Budget for economic management purposes and I'm going to cut personal taxes in this Budget," Mr Noonan told Newstalk's Pat Kenny during an in interview on Thursday morning.

“ I’m going to cut the Universal Social Charge (USC) by at least 1 per cent and maybe a bit more”, he added.

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“But to target all the people I want to target - lower paid people, middle income people - I need to use income tax, PRSI and USC, because there are three different personal taxes,” he added.

“But I’m doing it so work pays better than it pays now and there’s more take-home pay and that I’m incentivising more people to go to work and I’m incentivising people to come home who were forced out.”

The changes are likely to be in relation to the 7 per cent USC rate for those earning between €17,500 and €70,000 per annum.

The Irish Times reported in May that the two Coalition parties had reached a new agreement on tax, which would focus on reductions to the USC. Fine Gael had previously pushed for cuts to the higher rate of income tax while Labour favoured USC reductions.

In an interview with The Irish Times recently Tánaiste Joan Burton said she was pushing for changes to the USC so that tens of thousands of workers would no longer pay the charge by raising the entry point from €12,000. "Reforms to the USC will be targeted at low-and-middle-incomes," Ms Burton said.

During the Newstalk interview on Thursday, Mr Noonan said he felt there was a "better than 50 per cent (chance)" of a deal in relation to a new bailout for Greece.

“What has changed is, a lot of us around the table weren’t sure is they were serious about making a deal or if they wanted to leave the euro and blame the European institutions for forcing them out”, said Mr Noonan.

“It seems now they are quite serious and the have started the legal process.

“We got a letter signed by the Prime Minister of Greece, on behalf of his government and the Greek people, requesting a third programme for Greece.”

He said Greece's new finance minster Euclid Tsakalotos is "very impressive".