We’ll ensure low and middle-income workers will be freed from USC

08 February 2016


Speaking at the launch of ‘A Strong Economy for a Decent Society’ this morning

This plan is about a simple principle: fairness.

Ensuring the recovery is protected and sustained.

And spreading the benefits to those who need them most.

That’s precisely what Labour’s plan will do.

We’ll stand up for working people, families and communities.

I grew up in a working class home.

So when I look at the country’s finances, I think of all the people who sit at their kitchen table, juggling the family finances.

Making a little go a long way.

Never spending what they cannot afford.

We in Government have a duty to them.

A duty to every person and family who has sat at a kitchen table during the crisis and

wondered how they’d last until pay-day.

Our duty to them is to sustain the recovery.

Make sure we never go back.

No return to crisis.

Our proposals are built on cautious and prudent foundations.

So if something isn’t affordable or responsible, we won’t do it.

And we’ll steadily reduce our national debt so that we’re prepared for any trouble that

lies ahead.

Sound public finances are the bedrock of everything we do.

This is central to our core task.

To build a decent society, not just a strong economy.

There was nothing fair about the 2008 crash.

Nothing fair about Fianna Fail’s reckless economic management.

Nothing fair about the devastating effects this had on people’s lives. 

Labour was elected to government to fix the problems – in a fair way.

We’ve done our utmost to do that.

We prioritised the creation of jobs.

We did that because secure and fairly paid work is the best protection against poverty, the best path to greater prosperity.

We protected core welfare payments. 

And when resources became available, we invested additional money in schools, healthcare facilities and other services our communities need.

That was the first phase – restoring the economy to health and beginning the process of raising living standards.

In this plan, we are spelling out the second phase – sustaining the strong economy and building a decent society.

Alex and Brendan have already addressed different elements of the plan. I want to address the issue of tax reform, and USC.

Labour in Government has driven the reduction of USC for low and middle-income workers.

Last month, take-home pay increased for those workers after the second successive such reduction.

But we must – and will – go further.

USC is the disastrous legacy that FF bequeathed on every worker.

It’s a penal tax, and takes too much from ordinary pay packets. 

It’s time for the USC to go for low and middle-income workers.

So our plan is very clear – and very fair.

We will abolish USC on the first €72,000 of individual income.

That will deliver significant benefits for low and middle-income workers.

At the same time, we will reduce PRSI for the lowest-paid workers.

And we’ll freeze the gains through a claw-back mechanism for the very highest earners.

Our progressive tax plan means that in year one:

  • A worker on €25,000 will benefit by €44 a month. 
  • A worker on €50,000 will benefit by €26 a month.
  • But a worker on €120,000 won’t benefit at all.

Over the five-year lifetime of our plan, the taxes of that same worker on €25,000 will be reduced by a third – or more than €1,100 a year.

But someone earning €120,000 or more will continue to pay the same taxes as they do now.

That’s progressive.

That’s fair.

That’s what it means to stand up for low and middle-income workers.

We’ll ensure that they will be gradually freed of this penal tax.

At the same time, we’ll ensure the wealthiest in society continue to pay their fair share.

That will ensure resources are available for investment in essential services such as schools, childcare and healthcare.

Over the next five years, our mission is to sustain and spread the recovery and create an economy and a society that works for working people.

A recovery that increases their living standards through sustained wage increases, targeted and responsible tax reductions and investment in the services families and communities need.

We’ll use our economic strength and stability to continue to build a decent society.

Our vision is of a shared recovery, one that is about supporting workers, their families and those left behind by the crash.

In other words, a fair recovery.

And Labour’s plan will deliver that.


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