Abolishing Universal Social Charge ‘fanciful’, says Rabbitte

Labour TD Pat Rabbitte has said the idea of abolishing the Universal Social Charge (USC) as "fanciful".

"The notion that you can abolish it at a stroke, I'm afraid, is fanciful," the former Labour Minister told RTÉ's The Week in Politics. "The Labour Party's continuing objectives in relation to USC is to continue to moderate it and to continue to restructure and reform it. The task is bigger for this Government than keeping Siptu happy. I think the task is people generally whose living standards have been eroded."

He was responding to a question about trade union Siptu’s call for the USC to be abolished. Siptu president Jack O’Connor has said the USC “is at odds with the generally progressive character of the PAYE system in that a person on the minimum wage pays at the same level as those at the top of the income spectrum”.

Last week Tánaiste Joan Burton denied there is a disagreement between Fine Gael and Labour over tax reform but says the issue has led to "strong debate and discussion" between the Coalition parties.

Tensions have reportedly risen between the two in recent weeks over whether or not tax reforms should focus on cutting the USC, which would be of more benefit to lower paid workers, or to cut the higher level of income tax to benefit higher earners.

Ms Burton said the "real case for reform" arises in relation to low- and middle-income earners and creating a tax system that ensured it was "always worth taking a job2.

“I believe that is a view that Fine Gael share,” Ms Burton added.

The USC was a tax introduced in January 2011 which is paid on gross income. Under Budget 2015 incomes of €12,012 or less will be exempt.