Dáil Éireann Debate, Tuesday - 17 February 2026
452. Deputy Barry Ward asked the Tánaiste and Minister for Finance the position regarding any research carried out into the cost of eliminating the universal social charge; and if he will make a statement on the matter. [11678/26]
Amharc ar fhreagraAs the Deputy will be aware, the Universal Social Charge (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.
In 2016, joint Department of Finance/Economic and Social Research Institute (ESRI) research found that USC represented a more stable form of revenue than income tax. The findings highlighted that USC revenues would fluctuate by less than income tax revenues whenever income is volatile, for example where the economy moves from a boom into a bust. Given the openness of the Irish economy and consequent susceptibility to economic shocks, the contribution that the USC makes to the stability of the State’s revenue sources is considerable.
The Department of Finance also carried out a review of the personal tax system in 2023. This review included analysis of the USC and was published as part of Budget 2024 documentation.
The USC yield for 2025 amounted to €5.6 billion, and for 2026, it is projected to total approximately €5.8 billion. Given its significant yield the USC has played a vital role in meeting the many expenditure demands placed on the Exchequer in recent times. Therefore, if the USC were to be abolished it would be necessary to generate this yield from alternative sources.
