The USC Charge - Will it be there forever?

anncoates

Geuze wrote: »

Note that the USC tax simply replaced two previous levies - it is not an extra tax.

the Health levy
the Income levy

Some people who didn't pay the previous levies do have to pay USC, yes that's true, as it has a broader base.

So most people (not all) do not pay any more due to the USC, they pay more or less the same as they previously paid in the two levies.

Some people may even pay less in USC than the two previous levies.

Most people think that it is a new tax.

It is, in some sense, as the name is new, but it simply replaced two previous levies.

Summary: 2 imakey uppy levies were combined into one makey uppy levy.

jester77

NuckingFacker wrote: »

You really don't get how careful with money many Tourists are. There's a psychological impact of €103.99 over €99.00.

Also, USC, will it be there forever? Probably, but chances are it will slowly creep up in size. Low tax economy? Who started that joke off?

It still is low tax in comparison to other EU countries, especially for low earners. Someone earning 10k a year in Ireland will have an extra €170 a month in their pocket, and better benefits, compared to the same person in Germany.

Akrasia

Del2005 wrote: »

No. It was to replace excise duty on new vehicles, which the EU banned. VRT was just a tax made up to keep the revenue from new cars to the wasters in the dail pumping the pump in the parish.

They will never get rid of the USC. We didn't pay enough tax to run the country. Removing it would require even more cuts in spending.

Or, we could collect tax from corporations
Multinationals in ireland pay an effective tax rate of 2.5% (according to David McWilliams
http://www.davidmcwilliams.ie/2013/10/14/lets-talk-about-tax

If they paid the 12.5% that they were supposed to, they'd be paying 12.5billion a year to the exchequer

anncoates

Akrasia wrote: »

If they paid the 12.5% that they were supposed to, they'd be paying 12.5billion a year to the exchequer

To another county's exchequer, more likely.

Agricola

I'd imagine at some point in the future when the economy is stronger, a party (probably FF) will have the scrapping of the USC on its election manifesto. And they will walk that election on the strength of it.

Playboy

Anyone know how Ireland's tax regime fares against otherm western European countries? Its obviously less than places like Sweden but it would be intersting to compare and contrast with the UK, France, Holland etc.

Bullseye1

Del2005 wrote: »

€4 extra on a €100 bill isn't going to kill tourism.

It won't help either.

Bullseye1

jester77 wrote: »

It still is low tax in comparison to other EU countries, especially for low earners. Someone earning 10k a year in Ireland will have an extra €170 a month in their pocket, and better benefits, compared to the same person in Germany.

Would you rather have German public transport, health system or are you happy with ours?

jester77

Bullseye1 wrote: »

Would you rather have German public transport, health system or are you happy with ours?

I've no problem paying high taxes for what I get. But I always hear people in Ireland giving out about the services they get for their tax. You have to look at it realistically, when you pay low taxes then you can't expect high quality services.

Floppybits

OP, Any temporary tax ever introduced in this country becomes permanent. Expect in 3 years time when the property tax management moves over to the local councils that there will be increases in it every year and you can bet that most the money collected will not be spent on improving services but on increasing the wages.

Cuttlefish

Yes here to stay and crippling households and restricting economic growth.

ofcork

Playboy wrote: »

Anyone know how Ireland's tax regime fares against otherm western European countries? Its obviously less than places like Sweden but it would be intersting to compare and contrast with the UK, France, Holland etc.

Our corporation tax is one of the lowest in Europe if not the lowest iirc.

Sam Kade

What about the 6c/L they slapped on petrol and diesel at the start of the recession and VAT added to that. It's long forgotten but still being paid :mad:

hmmm

Politicians love doling out money - they get to behave like some sort of medieval king, handing out other people's money to their favoured clients.

They hate cutting taxes as it means less money to distribute.

Bullseye1

jester77 wrote: »

I've no problem paying high taxes for what I get. But I always hear people in Ireland giving out about the services they get for their tax. You have to look at it realistically, when you pay low taxes then you can't expect high quality services.

We don't pay low taxes. The taxes we pay are badly utilised. When 3/4 of health and education budgets are spent on wages something is seriously wrong. In order to get something resembling a German system we woud have to go back to the drawing board. And as we know that ain't going to happen.

Geuze

Cuttlefish wrote: »

Yes two previous Levies that didn't exist until the Banking crisis. We are all paying €4B more in tax than 5 years ago and as other posters have said it will increase

Incorrect - these levies long precede the banking crisis.

Note that Govt revenues are fairly stable at 55-56bn.

See here, table 1:

http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2013/gfsa2013.pdf

Geuze

Akrasia wrote: »

Or, we could collect tax from corporations
Multinationals in ireland pay an effective tax rate of 2.5% (according to David McWilliams
http://www.davidmcwilliams.ie/2013/10/14/lets-talk-about-tax

If they paid the 12.5% that they were supposed to, they'd be paying 12.5billion a year to the exchequer

Incorrect.

See Seamus Coffey, here:

http://economic-incentives.blogspot.ie/2013/10/12-billion-in-ct-revenue.html

Geuze

Playboy wrote: »

Anyone know how Ireland's tax regime fares against otherm western European countries? Its obviously less than places like Sweden but it would be intersting to compare and contrast with the UK, France, Holland etc.

Overall taxes are 30% of GDP, and 36% of GNP.

Highest is DK at about 50% of GDP, EU average is 40% of GDP.

Read this:

http://taxpolicy.gov.ie/wp-content/uploads/2013/07/2013-06-17-BOC-Conference-Presentation-Final.pptx

Cuttlefish

Geuze wrote: »

Incorrect - these levies long precede the banking crisis.

Note that Govt revenues are fairly stable at 55-56bn.

See here, table 1:

http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2013/gfsa2013.pdf

My comment was meant to read that we are paying €4Billion more in tax due to the USC or whatever it was called before that.

One thing for sure this was not on my pay packet before the banking crisis!

K-9

Cuttlefish wrote: »

My comment was meant to read that we are paying €4Billion more in tax due to the USC or whatever it was called before that.

One thing for sure this was not on my pay packet before the banking crisis!

Maybe it should have been on your pay packet before the crisis?

All the parties engaged in auction politics over who could cut taxes most, even SF and Labour. We'd a situation when nearly half the population paid little or no income tax at all, but apparently we were still a high tax country.

The problem is we cut income taxes too much, and expected German like services, and now we are highering taxes to pay for cutting them too much. People don't release that cutting income tax too much was a cause of the whole economic mess.

It was an unpopular view to argue in a country that wants Boston type taxes but Berlin levels of Health and Education.

Cuttlefish

K-9 wrote: »

Maybe it should have been on your pay packet before the crisis?

All the parties engaged in auction politics over who could cut taxes most, even SF and Labour. We'd a situation when nearly half the population paid little or no income tax at all, but apparently we were still a high tax country.

The problem is we cut income taxes too much, and expected German like services, and now we are highering taxes to pay for cutting them too much. People don't release that cutting income tax too much was a cause of the whole economic mess.

It was an unpopular view to argue in a country that wants Boston type taxes but Berlin levels of Health and Education.

What level of Health and Education do we have?

So inflated house prices was not a problem?
or the mad dash by ordinary people and not so ordinary people to become landlords!

I mean to say it is less than 100 years since the landlords from across the water were evicted and we only replaced them with our own!!

People buying property they never even saw!

I heard that there was a section on the "Today" with SOR in which a developer, Gerry Gannon, bankrupts a coffee shop coz they owe him €10K and he himself had debts that were taken over by NAMA.

At the height of the boom you had to battle through hard sell operators trying to get you to buy property in Hungary or wherever. Where are they now?

The USC charge is to pay for the property crisis that the greedy got the Irish people into.

OneArt

jester77 wrote: »

It still is low tax in comparison to other EU countries, especially for low earners. Someone earning 10k a year in Ireland will have an extra €170 a month in their pocket, and better benefits, compared to the same person in Germany.

Actually, aside from social contributions, those earning up to 19, 000 a year in Germany tend to have more money because they can claim tax back.

And Germany's infrastructure and social system are far superior to Ireland.

K-9

Cuttlefish wrote: »

What level of Health and Education do we have?

So inflated house prices was not a problem?
or the mad dash by ordinary people and not so ordinary people to become landlords!

I mean to say it is less than 100 years since the landlords from across the water were evicted and we only replaced them with our own!!

People buying property they never even saw!

I heard that there was a section on the "Today" with SOR in which a developer, Gerry Gannon, bankrupts a coffee shop coz they owe him €10K and he himself had debts that were taken over by NAMA.

At the height of the boom you had to battle through hard sell operators trying to get you to buy property in Hungary or wherever. Where are they now?

The USC charge is to pay for the property crisis that the greedy got the Irish people into.

Exactly, instead of not cutting income taxes after 2002 or so and relying on stamp duty and other property and personal consumption taxes like VRT, we are left with paying a tax that was introduced to pay for the mess. I looked for a party that didn't want to cut taxes in the election in 2007, couldn't find one, all of them trying to outdo the other.

Just like there were people who didn't buy into the property mania there was people who also saw what was happening to our tax base, probably less in number though from my recollection, people would have looked at you like you had 2 heads if you talked about not cutting taxes, never mind increase them.

Ray Palmer

Was PRSI meant to be a temporary tax? Can anybody point to anything that actually verifies that? It looks like it was an integral part of the system from the beginning. The limit on it being removed is very questionable.

USC did replace other temporary AFAIK so it should be done away with at some point. It is very hard for any government to reduce tax income.

Tiddlypeeps

SafeSurfer wrote: »

More people in Ireland are employed in the domestic tourism industry than by multi nationals. Yet the 12.5% corporation tax is a sacred cow which almost all political parties refuse to consider increasing.
Tomorrow the vat rate on our tourism industry will be increased despite the creation of 15,000 jobs in the sector as a result of the imitative.

Corporate profits have escaped any charge on their profits despite the application of a "universal" social charge on the incomes of all citizens.

Why are ordinary Irish workers continuing to subsidise the multi million euro profits of multi national corporations which are largely repatriated to their already wealthy shareholders.

How are Irish workers subsidising multi national profits?

I can understand the desire to tax them higher but there are two issues with that:

One is confidence in our tax systems. If we even increased the tax by 1% it would set a precedent that multinational companies won't like. When considering setting up here for the low tax they will see that it has increased recently and is therefore likely to increase again. This makes setting up here just for the tax high risk.

The same goes for companies who are already here and are considering expanding.

So an increase could only harm employment.

Two is that a lot of the multinational companies who set up here are web based like Google and Facebook. These guys have huge profits that are generated on the web, this means that the profits aren't strictly tied to any country so it means they can filter a lot of their profits through Ireland to take advantage of our low corporation tax. So the profits that are being taxed aren't just those generated by the staff they employ here, they are generated by their global business. We are pretty much a money laundering service. You can debate the ethics of this all you like but the fact of the matter is that this brings in massive revenue to us.

So not only would an increase in corporation tax harm employment it would also likely reduce the amount of revenue we generate from the corporation tax, it would be counter productive.

There is a chance that companies will value our tech culture, our language and our location within Europe enough to take the risk with a small increase in corporation tax, but that's a very risky bet to take and is potentially political suicide for any politician that pushes it.

yopy

I received a reply from Michael Noonans PA stating that the USC was never supposed to be a temporary tax.

See reply below...



The Minister for Finance Mr. Michael Noonan T.D. has asked me to refer to your recent email regarding the Universal Social Charge (USC).

The USC was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base. I should point out that it was never intended that the USC would be a temporary measure, it was designed and incorporated in to the Irish taxation system as part of its permanent structure and the revenues collected are transferred to the Exchequer.

Delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012. The report is available at www.finance.gov.ie. As a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.

I would point out that revenues raised through the tax system for the Exchequer are fundamental to enable expenditure on public services including the Health Service, Welfare and the Justice system.


I trust this clarifies the position.

mikom

yopy wrote: »

I received a reply from Michael Noonans PA stating that the USC was never supposed to be a temporary tax.

See reply below...

I would point out that revenues raised through the tax system for the Exchequer are fundamental to enable expenditure on public services including the Health Service, Welfare and the Justice system.

Putting it to good use I see............ http://www.boards.ie/vbulletin/showthread.php?t=2057190392

Idbatterim

Delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012. The report is available at www.finance.gov.ie. As a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.

There is no way that the government should get rid of USC, or even lower it IMO. Those earning below 33k are paying very little to virtually nothing in direct taxes. When it goes, what is increased or cut to pay for it? Given that is was very difficult to implement USC at a time of crisis, they can forget doing it at any other time, particularly with elections coming up.

This was posted yesterday in a thread in the economics forum.

However,such Public Debate,in current Irish terms,doubtless centre upon the State taking away badly needed supports from the needy etc etc.

We have to remember that the Irish electorate voted continually,in great numbers,for those household political names who year after year declared in their budget speeches the intention to remove "X,000 People from the Tax-Net"....That sort of policy,if stated to a German,might have sparked a suspicious response along the lines of.."But,Herr Minister,who will then pay for all the Free-Stuff for the others ?"....We however,lapped it all up....

In my own area of operation,the situation with the DSFA Free Travel Scheme is of note whereby c.748,000 persons out of an adult population of c.3,000,000 are deemed to merit Free Travel on Public Transport Nationwide,a figure to which must be added a further 300,000 Spouse-Partner/Companions,giving a total legitimate figure of c. 1.100,000 or approximately One Third of the Adult Population.

The merits or otherwise of the Free Travel Scheme are not of concern IMO,but rather whether any thought whatever has gone into any analysis of how such largesse can be realistically funded.

I guarantee that,very rapidly after a first post on such a topic,we will have a response pointing towards Bankers......

Someday

What is the view now, a couple of years on from the first post.

I would get rid of it over the next 3 years in my IMO but I can see the new government taking 5 years, so they have something in each budget to give away!

MilesMorales1

I'd say we'd better get used to it long term.