USC (17 Days To Election)

Ok, let’s talk tax. More specifically, let’s talk USC, which has already become a significant talking point in the course of this election.

I had a negative experience with USC very recently, which has made the tax’s existence a prescient thing for me. Midway through 2015 I was advised by my primary employer’s financial office to sign up to pay USC even though I wasn’t earning enough on a weekly basis to be eligible for it. I was advised because they estimated I would breach the threshold, calculated on a yearly basis, and that the entirety of my owed USC for a year would be taken out in one swoop.

I duly signed up, and thought as little about it as I could. No one likes seeing money taken out of their payslip after all. But then just a few weeks ago, the same financial office advised me that I had actually come in under the threshold, and so could claim the entirety of my USC back. I won’t say how much, but it was a sizable sum to say the least.

Happy days. Until it emerged that the only reason I appeared to be under the threshold was because my other employer – the one who went out of business – had left it to the last possible minute to give my pay and tax details to the Revenue service, for whatever reason. So, I was actually over the threshold, and entitled to nothing.

So, I wasn’t screwed over – legally speaking – but I still felt robbed, in that irrational way. I’m not earning enough that such an outcome doesn’t smart a little. And then an election was called, and everyone was suddenly talking about USC as well. Let’s go through some of the party statements on USC, and see how they line up to me.

To be clear, I am not in favour of abolishing USC, at least not without it being replaced by something else. I believe there have been rumblings about this, with PRSI to expand in scope, but this isn’t being talked about as much. While an emergency tax, the emergency isn’t over, and the Irish finances couldn’t handle the sudden drop in revenue if USC was done away with overnight. My problem is with the levels that USC is implemented on people, and the continuing discrepancy between tax revenue taken by the state and money pumped into government services.

It isn’t all that hard to find the parties’ opinions on USC. Indeed, this RTE piece is essentially a quick summation for several of them, FG, FF and the Soc Dems. Fine Gael want the charge gone, apparently, even though they acknowledge the hole it will leave. And, as others point out, USC can’t, and won’t, be eliminated in one fell swoop. This is a good thing, but be wary of candidates leaving that bit of information out. Over the course of the next government, USC could be phased out, and that wouldn’t be too bad, but only in line with increased taxation from other avenues.

Multiple parties want to retain USC, but to put a cap on incomes under which it will not be collected. Fianna Fail, in the above link, say 80K. Labour are saying 72K. AAA-PBP, in that leaflet I got the other day, are saying 70K. Sinn Fein say on their website that they will remove those on minimum wage from having to pay the tax. It’s a wonder it’s even an issue at all really…

Fianna Fail are even, shock horror for them, moving towards something curiously like a wealth tax, suggesting that the USC could be retained, or enlarged, for those on the larger incomes, something the harder left has been talking about forever. I certainly believe that people under-employed should not be asked to pay USC – I’m one of them, but so be it – but 70K seems a bit high of a cut-off to me, even for a household. Regardless, I don’t trust a word Fianna Fail says as such issues, and AAA-PBP won’t ever be in a position to implement such an idea.

It’s the Social Democrats, and the Greens to a lesser extent, who are the ones banging the drum in the completely opposite direction, in line with their Scandinavian style economic plan. There’s something brutally admirable in the way the Soc Dems refuse to play the tax cut game, but the question with them is their ability to actually make good on their promises, likely to only have three TD’s in the Dail, that will probably not even be in government (and if they are, with serious compromises). They are playing a long game of course. I’m totally on-board with maintaining the tax regime as it is, but only if it means services are improved. Right now, I don’t feel like that is the case, and a party that could prove to me they would make it the case would be very tempting.

Renua, if you care, think USC and everything should be replaced by their flat tax of 23% – which will leave me worse off, by the way – and also suggest that within the current tax system, USC should be abolished for the self-employed earning 100’000 or more. If there’s a party out there further away from appealing to me that is also in the Dail, I haven’t encountered them yet.

In the end, looking at tax policies is a depressing, confusing exercise, where the strength of stated policies is in a constant balancing act with expectations that they actually be carried out. For me, I distrust Fine Gael, Labour and Fianna Fail. I have little time for Sinn Fein or AAA-PBP’s economics. The Greens are irrelevant, and Renua are abhorrent. That leaves the Soc Dems, whose refreshingly honest appraisal, and warnings that slashing taxes leads to dangerous boomtime situations, is attractive to me. If you improve services and lower the cost of living, as the Soc Dems want to do, I’ll happily pay my tax and my charges without complaint. But I fear I am an exception in a country obsessed with the money going into our pockets over every other consideration.

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