Review of the Universal Social Charge Post author By Philip Lane Post date January 23, 2012 The review document is here. Categories In Uncategorized 10 Comments on Review of the Universal Social Charge ← Debt and Deleveraging → Silicon Docks 10 replies on “Review of the Universal Social Charge” “However, as the USC raises €4 billion in a full year, it is imperative that under the constraints of the EU/IMF Programme, any changes which reduced the tax yield would have to be compensated for by either raising other revenue through the tax system or reducing expenditure further” Er, does that mean they ain’t going to change anything then? Doesn’t it need a new name. The NUSC perhaps, where ‘N’ is for nearly. Chapter 7 deals with pension issues and anomalies relating to USC. It completely omits one very blatant anomaly that affect mostly private sector PRSA schemes. [Different USC treatment of employer pension contribution] But guess what, a special plea mostly for pre 1995 PS. Option 4 – treat non-integrated public service pensions as exempt from the USC This option would see the occupational pension payment on non-integrated public service pension schemes as being except from the USC. Cost: €90 million Would undermine the principle of the USC being applied to income with few exceptions. The cost would have to be balanced by alternative revenue raising measures. You have to hand it to these people. The ingrained instinct to look after me fein, thta is of course after the obligatory preamble about ‘equity’ etc. Anyway it is only €90 million of USC relief mostly for a number of pre 1995 PS employees. And sure what is €90. Small change. Only 20% of the amount taken from private sector pensions for ‘job creation purposes’. The great value of this review is that it is comprehensive and fact based. Irrespective of the action taken, the “universal” in the USC may yet mark a watershed in the approach to economic and social policy in Ireland. The OECD data, shown in appendix 2.1, provides useful comparisons with other countries. This spreadsheet provides a bit more detail: http://www.oecd.org/dataoecd/7/11/47412290.xls Look at the tab “Tax Wedge Overview” and compare Ireland with the OECD average. It certainly seems that ‘average’ and ‘below average’ Irish workers aren’t paying enough (relatively). The only cohort that is paying (slightly) above average is single earning 1.67 times the average wage. Unfortunately data for high-earning couples aren’t provided. Should comparative data be used to identify those groups not paying enough in Ireland? “However, as the USC raises €4 billion in a full year, it is imperative that under the constraints of the EU/IMF Programme, any changes which reduced the tax yield would have to be compensated for by either raising other revenue through the tax system or reducing expenditure further” Er, does that mean they ain’t going to change anything then? Why should they? We’re broke. In fact the USC is the best argument yet for increasing income taxes even further. It was effectively a poverty-tax, squeezing those on lowest incomes the most, leaving those with more untouched or even better off if they earned enough. Yet it raised €4 billion in a year. Imagine waht a real tax could raise! This country can make it if we cut back our spending and increase income taxes. We should be looking at a minimum of 60% taxes in the second band, and an introduction of several new graduated tax bands, reaching up to 95% at high enough income levels, like the US used to have. Naturally, we should also be looking into cutting pensions, salaries, and also jobs in the public sector. This country can actually make it, if it really wants to. @ OMF It doesn’t! However, it may have to! cf. Harry McGee’s article in today’s IT (a welcome antidote to distractions such as Promissory Notes). http://www.irishtimes.com/newspaper/ireland/2012/0124/1224310673007.html @OMG “This country can actually make it, if it really wants to.” This country doesn’t really have a choice or it really will just get outsourced to China or India as a fresh water supply and somewhere to grow vegetables to feed their own people. The large allotment formerly known as Ireland. Sorry, that should have been @OMF Oh my God and all that. I think it’s hilarious that the people suffering for this are the ones who never would have benefited from the cause, never caused the problem in the first place, and are earning up to 75% LESS income than the people who caused it. Additionally, earning over a certain amount means even less pain felt because of new incentives for the wealthy. The banking sector took incredible risks with it’s money, and if they had succeed we the public would see not even one cent in return. In fact, the only thing we saw during this time frame was INCREASE in loan rates, so in fact they took more from us. Now their gamble has bitten them in the arse, and we – who never would have shared in their winnings – are bailing them out. A good bonfire would do wonders, perhaps with a few effigies (to hell with straw men, lets throw the bankers instead) @OMF We’re broke and getting more broke because businesses are failing. Businesses fail when there is no economy in which to earn money (to simplify, people with money to spend on those businesses); and there are none because we’re being taxed to the bone. People are making choices between food and bills, this means the corner shop that makes pies and keeps 3 people employed has nobody to sell pies to. The economic disaster is getting worse as we go along. Now that families must stump up €100 land tax (2 quid a week!). Paying this has put my wife and I on alternate weeks going without meals. History tells us that this will increase: perhaps my children will need to go without meals soon. Let me be clearer with you. Before the attack on the middle and low income classes, the economy was thriving but banks were poor because they couldn’t budget for the eventuality, and they couldn’t see past their own greedy noses. Now the banks have our money, and the economy is in the toilet. Comments are closed.