Noonan aims fresh USC cut at ‘squeezed middle’

A further cut to the universal social charge, aimed at the so-called "squeezed middle", is set to be announced by Minister for Finance Michael Noonan in next week's budget.

Mr Noonan is expected to reduce the 5.5 per cent rate of the USC by 0.5 per cent, along with previously announced cuts of 0.5 per cent to the lowest USC rates – from 1 per cent and 3 per cent to 0.5 per cent and 2.5 per cent.

Mr Noonan agreed the measure with Fianna Fáil and Independent members of Government and it follows criticism that next Tuesday's budget would do little to benefit working families.

The extra cut to USC will mean those on the average annual wage of €36,699 will see their tax bills lowered by €183.50.

Mr Noonan has indicated the higher USC rate of 8 per cent, applying to income above €70,044 per year, will remain unchanged

Lump sum grant

It is also understood the threshold at which first-time homebuyers will be eligible for a grant to help them accumulate a mortgage deposit will be higher than previously flagged.

Sources said the grant to be announced in the budget could apply to deposits on newly built homes with a maximum value of between €480,000 and €500,000.

It is estimated this could increase the possible lump sum grant, to be given as an income tax refund, to as much as €20,000.

Previous indications were that it would be €15,000.

Mr Noonan, along with Minister for Public Expenditure Paschal Donohoe, is due to meet members of the Independent Alliance to discuss their budget priorities today.

There will be further meetings between the Government and Fianna Fáil and the Cabinet will also meet this evening to discuss the budget.

Minding grandchildren

The Alliance is still pushing for its package of welfare increases for pensioners, over and above any increases in the State pension.

It is understood it tabled proposals earlier in negotiations for a welfare payment for grandparents who mind their grandchildren.

The proposal was greeted with scepticism elsewhere in Government, with one source describing it as “mad”.

It was ruled out by Mr Donohoe.

Mr Donohoe and Minister for Children Katherine Zappone last night settled the amount of money she will get for her childcare package.

Negotiations were still continuing between Mr Donohoe and the Departments of Health and Social Protection.