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UNIVERSAL SOCIAL CHARGE

A group of coalition backbenchers wants the Government to close a loophole that allows a group of high earners to benefit from the new universal social charge and Brian Lenihan has agreed to meet them on the issue, The Sunday Business Post reports.

The backbench TDs point out there is public outrage over the measures in the Budget without compounding the gap between rich and poor. Under the current proposals, high earners have been hit proportionately less than those on middle and lower incomes. Self-employed people with salaries above €206,000 will actually make a cash gain as a result of the changes proposed.

A self-employed individual making €500,000 would be €8,800 better off according to figures from Ernst & Young.

“It is politically untenable to have a situation where people with an income of several hundred thousand euro were actually better off from the toughest budget in the history of the state,” said Fianna Fail TD, Michael McGrath.

In the same newspaper, a dissection of the new social charge by Pat O’Brien, a tax director at Ernst & Young, details the results unless reforms are put in place. The winners are the self-employed who earn over €175,000 a year and “certain better-off older people aged 70 or over” who will pay the new charge at a maximum rate of 4%, compared with the current rate of 6%.

“The position at the other end of the income spectrum tells a different story, with many people on low incomes being brought into the scope of the universal social charge in quite dramatic fashion. At present, the entry point for the income levy is €15,036; the equivalent figure for the health levy is €26,000. These will now be replaced with a single exemption threshold of €4,004 (€77 a week).

“Anyone earning as little as €1 a week above this limit will be liable to pay the universal social charge. It is perhaps a measure of the dire straits in which we have fallen that even teenage children doing the proverbial paper round will now be asked to pay tax.”

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