Written Answers Nos. 1-130
127. Deputy Richard Boyd Barrett asked the Tánaiste and Minister for Finance if he is considering abolishing USC for workers earning less than €100,000 in order to help workers with increases in costs of living. [68656/26]
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.
The USC has played a vital role in meeting the many expenditure demands placed on the Exchequer. The USC yield was c. €5.6 billion in 2025, and a projected yield of €5.9 billion is expected in 2026. If USC were to be abolished or curtailed, it would be necessary to raise this amount from other sources.
Over the lifetime of the previous Government amendments to USC were also implemented. The ceiling of the 2 per cent USC rate band was increased by €6,898, or 34 per cent, in line with increases in the National Minimum Wage. The middle USC rate of 4.5 per cent was also reduced by 1.5 per cent to 3 per cent.
In addition, in line with the increase to the National Minimum Wage from 1 January 2026 the ceiling of the 2 per cent rate band increased from €27,382 to €28,700.
Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.
The ‘Programme for Government 2025: Securing Ireland’s Future’, contains specific undertakings with regard to personal taxation, and 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.
129. Deputy Sean Fleming asked the Tánaiste and Minister for Finance if he will ensure the proportionate application of Revenue fixed penalty sanctions for administrative measures as recommended by the report of the Cost of Business Advisory Forum. [68409/26]
View answerI thank the Deputy for his question.
As the Deputy will know, Recommendation 48 of the Cost of Business Advisory Forum relates to Enhanced Reporting Requirements (‘ERR’). It recommends the penalty for non-compliance be reduced and a more graduated approach to errors be implemented.
ERR was introduced in 2024 and requires employers to report details of certain payments / benefits made to employees without the deduction of tax.
The categories required to be reported are:
• Travel & Subsistence;
• Small benefit exemption; and
• Remote Working Daily Allowance
The ERR legislation provides for the application of fixed penalties in certain circumstances, for example a €4,000 penalty for each instance in which a return or notification under ERR has not been made.
It is worth noting that Revenue adopted a “service for compliance” approach for the first 12 months after ERR was introduced, meaning no compliance interventions were carried out, and no penalties were applied where employers were unable to meet their obligations straight away.
The intention of the fixed penalty is to act as a deterrent to employers who do not file ERR returns. Revenue do not seek to penalise employers who are meeting their reporting obligations and have made a genuine error or correction when filing their ERR returns. Revenue is a statutorily independent body and the application of penalties relating to ERR is a matter for Revenue. I am however advised by Revenue that, to date, no penalties have been imposed in relation to ERR non-compliance.
The Report of the Cost of Business Advisory Forum is a relatively recent publication, and my officials are keeping the recommendations under review.
