The Government does not intend to abolish the universal social charge (USC) overnight, the Department of Finance has said, following the release of documents showing its phasing-out will benefit higher-income earners most.

“The Government never intended abolishing USC in one go. The plan is to phase out the USC,” a spokesman for the department said.

“While scope is limited in this year’s budget, there will be a further move to curb USC, especially for mid- to low-income earners.”

Gradual

Briefing papers released by the department outline a number of options if the levy was scrapped.

The documents say a gradual phasing out of the tax could be achieved, but there would be little scope for other measures.

“As the USC is a highly progressive tax, this would provide the greatest benefits to those on highest incomes, with little or no benefit to those in very low incomes,” they say.

The documents say a person earning more than €150,000 a year would benefit to the tune of €9,500 a year.

A person on the minimum wage would receive an annual increase of just €316 a year.

The department said the documents predated the programme for partnership agreed with Fine Gael and Independent TDs and were therefore not relevant.

‘Regressive’

The programme for partnership commits the Government to the “continued phasing-out of the USC”.

The agreement between Fianna Fáil and Fine Gael also commits to a reduction in the USC for lower- and middle-income earners, keeping a clawback for higher earners.

Sinn Féin TD Pearse Doherty said the notes confirmed the better-off would benefit more from removing USC.

“Clearly the Department of Finance is saying – this is not Sinn Féin saying – if you get rid of the USC or as the programme for government states, gradually erode the USC, what that will do is provide a benefit to the highest income earners.

“What it is clearly saying to the Minister is that abolition of the USC is regressive.”