POLITICS: The Government has been warned by briefs working on behalf of the Department of Finance, that property tax may go up 600% if the controversial USC charge is scrapped.
The documents drafted up by the Department of Finance were subsequently released under the Freedom of Information Act.
In the reports submitted by fiscal experts they warn against the removal of the USC charge, saying it will narrow the tax base, and see it as a regressive move.
A briefing note which was prepared for the incoming Government in February – outlined four potential options to replace the revenue lost by dropping the charge.
In an article published in The Irish Times, it said, “The first option outlined suggest the increase the local property tax six-fold, increase commercial property stamp duty by 1.75 per cent, increase stamp duty to 3 per cent, raise capital gains tax to 38 per cent and increase capital acquisitions tax from 33 per cent to 43 per cent.
“The second option is to increase the price of petrol and diesel by 18 cent per litre, increase excise duty on a pint of beer by €1.50, increase excise duty on spirits by €1 per half-glass, reintroduce the 13.5 per cent VAT rate for the tourism sector, and increase all other forms of VAT including raising the 23 per cent rate to 25 per cent and increasing the VAT rate on children’s shoes to 5 per cent.
The third option is to increase the 20 per cent income tax rate to 25 per cent and the 40 per cent income tax rate to 45 per cent.
The last option is to change Ireland’s lucrative 12.5 per cent corporation tax rate to 19.75 per cent.
If the Government decides to phase out the Universal Social Charge (USC), which is the option Fine Gael is in favour of, can be done within the fiscal space available to them.
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