The ESRI published it’s latest pre budget briefings and in it outlined a proposed Universal Social Charge. They are proposing that this be introduced in the next Budget as a Revenue Neutral Item.
Why a Univeral Social Charge?
If it’s Revenue Neutral why do it? The Universal Social Charge is to replace Employee PRSI, the Health Levy and the Income Levy. These have charge structures which are different and complicated individually, never mind when we look at them all together. So it would help clarify the taxes we pay.
How much is the Universal Social Charge?
The ESRI are proposing introducing the Universal Social Charge at a rate of 7.5%. It is proposed that it is introduced to people similarly to how the Income Levy is currently charge. So you would be exempt from the charge if you earned less than approximately €15,000 and if you had a medical card and for monies received exempt in a redundancy.
Whats the impact for me?
According to the ESRI, this charge will save the top 10% of income earners a typical 4.3% in tax and charges. The bottom 10% of income earners should achieve savings under this as well – your current PRSI charge kicks in well before €15,000. But for earners in the €25,000 to €50,000 this will generally cost more than you currently pay.
Will it happen?
We have a lot of proposed new taxes and charges in the last few years that have flashed into the news before fading out again. There is a lot of sense to simplifying all the different taxes and charges we have at the moment. But given the current budgetary crisis, I can not see this being implemented on a Revenue neutral 7.5% basis – I’d expect the government to lash a few percentage points on to the income levy or income tax instead.
What do your think? Let us know what you think – post your comments below