Dáil Éireann Debate, Tuesday - 29 September 2026
183. Deputy Conor D. McGuinness asked the Tánaiste and Minister for Finance the consideration he has given to using changes to USC as a means of reducing the tax burden on workers in preparing Budget 2027; and the way in which this compares with changes to the higher rate of income tax in terms of who would benefit. [68516/26]
View answerAs the Deputy may be aware, the USC was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.
The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.
It is important to acknowledge that the structural changes implemented to the rates and thresholds of the USC since its inception in 2011 have resulted in a significant reduction in USC liability for all taxpayers. In 2011 the rate structure was 2 per cent to €10,036, 4 per cent to €16,016 and 7 per cent on the balance. Whereas, in 2026, the rate structure is 0.5 per cent to €12,012, 2 per cent to €28,700, 3 per cent up to €70,044 and 8 per cent on the balance.
The ‘Programme for Government 2025: Securing Ireland’s Future’, contains specific undertakings with regard to personal taxation, it commits to “implementing progressive changes in taxation if the economy remains strong, including indexing credits and bands to prevent an increase in the real burden of Income Tax while in the event of an economic downturn and unexpected deterioration in the public finances we would postpone changes to Income Tax credits or bands, as we did in Budget 2021”.
This Government has committed to, and will stand by, its Programme for Government commitment to make progressive changes to personal income tax, if the economy remains strong over its lifetime.
As the Deputy will appreciate, it is longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters which might be the subject of Budget decisions.
