Labour says it will reduce not abolish USC for €100,000 earners

Labour will reduce but not abolish the Universal Social Charge for those earning over €100,000, the party said on Monday.

Tanaiste Joan Burton and Minister for Public Expenditure Brendan Howlin insisted high income earners must still pay the levy.

The statement puts it at odds with the Fine Gael party who will pledge to abolish the levy if re-elected to Government.

Mr Howlin said it was Labour party policy to have a progressive tax system which would allow for investment in services.

He said: “That is a Labour Party core value. If you look at what the impact of the total abolition of USC is.. if you are on € 25,000 the benefit from abolition is €750.

“If you’re on € 150,000 your benefit is €16,000. If that is the Fine Gael position it is not one I would agree it.” Fine Gael is to outline in its manifesto plans to abolish the USC in its entirety during the lifetime of the next government.

This shows that Fine Gael will immediately position itself in favour of tax cuts over increases in public spending.

Ms Burton said those earning over €100,000 needed to contribute to allow for investment in health, education and justice.

She said high earners would make some gains as the levy is reformed but it would be capped.

She said: “You cannot have levels of investment if you are simply talking about reductions for people earning very high sums of money.

“What we are talking about is capping their gains to be on par with what low and middle income earners would gain.”

Ms Burton said she was “very flattered that Fine Gael has very solidly adopted a Labour proposal and that proposal is focused on reducing USC for people on low and middle income as priority”.

The Tanaiste also insisted Labour can win more than 30 seats in the next election.

She said it was her aim and her belief that all deputies would be returned and that a number of Senators would also secure Dáil seats.

“I am very confident as the election approaches and as people get an opportunity to look at the platforms of various parties I think what Labour is offering over the next five years to the electorate is something that is deliverable and makes sense for the country,” Ms Burton said.

The comments follow the emergence of internal Labour Party analysis which details how the party could lose up to 20 seats in the next election.

The results showed on the party expects to return at the very least 10 deputies but that could increase to 16 on a good day for the junior coalition party.