Death and taxes are often cited as the two inevitables in life but there is a third: political rhetoric. And in the run-up to what is surely the most interesting general election in decades, the policies and promises are changing faster than last week’s passing of the Finance Bill. Although the country is imprisoned in the EU/IMF straitjacket, it appears there is still plenty of room for manoeuvre when it comes to how we will meet the financial burdens being imposed upon us – the difficulty lies in keeping up to date with the latest proposals from all the parties.
Labour has dropped its proposal for a new 48% tax rate from its manifesto, according to The Sunday Tribune. The change has been prompted by the introduction of the universal social charge (USC) which had “changed the game”, party sources said. The new measure, along with the abolition of the PRSI ceiling, which had restricted PRSI to income below €75,000, had sharply increased the effective rate of tax for higher earners, making Labour’s new tax rate redundant.
One of the central proposals of Labour’s pre-Budget submission was a proposal to tax individuals earning more than €100,000 or couples making €200,000 at the new 48% rate. Party sources told the paper the introduction of the new universal social charge and the PRSI changes had “done the job we would have done”.
However, watch this space. Labour sources also said they would be studying the new charge to see how it could be skewed towards affecting higher earners more. Again though, the government could have gazumped its left-leaning brethren by its introduction last week of a higher social charge for self-employed people earning more than €100,000 to offset a reduced rate for medical card holders.
In The Sunday Times, Jill Kerby is seething about the revised proposals to the Finance Bill to increase the social charge from 7% to 10% on self-employed earnings above €100,000.
“They were the only taxpayers targeted to pay for the €80m shortfall faced by the exchequer after the decision to remove medical card holders from the 7% rate,” she notes, asking why only the self-employed high earners have to carry the can rather than all high earners.
“The USC and the income to which it applies is riddled with anomalies. It is a very badly constructed tax and it should be reviewed and revoked by the next Dáil,” Kerby writes. “This surcharge on self-employed earnings over €100,000 is a disgraceful final act of tax discrimination by a discredited government. It single out a category of taxpayers who don’t enjoy the same social benefits as those employed in the private or public sectors, despite paying the same amount of pay-related social insurance.
“The self-employed work longer hours with less security and, unlike higher-paid civil servants or high-paid company directors, have no powerful unions to protect their interests and no financial resources to cultivate powerful political friends.”
If you are self employed or are a proprietory director, you will be subject to the new higher USC charge. Contact Noone Casey to review your tax status and look to minimise your tax liabilities.