Plans to abolish USC for ‘middle earners’ reckless, says Pearse Doherty

Sinn Féin's finance spokesperson Pearse Doherty has said the Government's plans to abolish USC for those earning up to €70,000 was reckless and a disguised tax break for the wealthy.

Mr Doherty said middle income earners were those on €28,500 per annum, according to the CSO and said the Government’s plan to phase out USC for those earning up to €70,000 was reckless at a time when there were many pressures on Irish society.

“The reason that they want to do that is to make it more palatable. To make it appear that this type of tax cut is to benefit middle income earners. It’s not. It benefits those on higher incomes, many of those are under pressure.

“The real question here is how we use the €11.3 billion, what they’re planning to do is abolish USC. By 2021 the €5.4 billion that would be due in USC in that year will no longer be available - the question to ask the Minister is can this country do without €5.4 billion in taxes every year from that year on?

“During the height of the boom personal taxes were reduced to unsustainable levels. What the USC was doing was correcting that. The USC was a deeply regressive tax which impacted on people earning as low as €4,000 - what Sinn Féin has been doing over the years is making it more progressive, taking low earners out of the USC tax net.

“That’s what we want to continue to do. To take €5.4billion out of the tax base every year is reckless.”

Minister for Public Expenditure Pachal Donohoe defended the plan saying that at the moment “anyone who earns €10 in overtime takes home only €5, we need to change that.”

The Minister told Newstalk Breakfast the Government wanted to save for the future which was why they were introducing the "rainy day fund".

“It is important to have it to deal with any external shocks in the future.”

However, Mr Doherty said the reason the Government said there were pressures in Irish society including the “the trolley crisis, the housing and homeless crisis, underfunding third level education, and primary and secondary education to a huge degree.

"There are all of these pressures that will be unmet unless the Government decides to change its tack in terms of massive tax cuts and low spending," he told RTÉ's Morning Ireland

“What you’re going to see in terms of current expenditure is a reduction as a percentage to the GDP over the next five years and that’s not acceptable for the needs of Irish society.”

He said Sinn Féin would abolish water charges and property taxes. “They are flat rate regressive taxes, they’re not based on income, what we would do then is invest in the Irish economy to increase your standards of living, to reduce the cost of living, to invest in health care for example.

“So we can ensure that if you do get sick that you won’t be lying on a hospital trolley or waiting a year and a half to see a hospital consultant.

“In terms of tax we don’t believe that the Irish economy can have a situation where you take that amount of tax out of the Irish economy. It’s not acceptable.

“In terms of capital investment, Ireland’s is about two per cent of GDP, where the European average is 3.5, now the government in terms of its summer economic statement is going to go to 2.4 per cent, but given the fact that we had massive under investment in capital over the last seven or eight years during the austerity period.

“What we need to do is ramp that up in the best way to deal with any future shocks to the Irish economy, to make sure that investment happens, that we have proper third level education, proper broadband services, road and rail infrastructure.

On the topic of the Rainy Day Fund, he asked: “how much rain needs to fall before we start using the resources available to our State?

Talk to the people who spent last night in a hotel, these are people who are homeless, they’re asking how bad does it have to get before the government will use the money to invest in housing for the homeless.

“This isn’t a fund that is going to be allocated at each budget - it will stay inside the Exchequer, if it’s not used within that year it will then be allocated to the fund, so in reality this is a fund for budget over runs, for supplementary budgets, if it was a real Rainy Day Fund, on Budget Day it would be allocated to the national pension reserve fund.”