Families to pay €700 more after sneaky USC hike

Hundreds of thousands of pensioners and families with medical cards are facing a sneaky tax hike – while high-earning self-employed people will enjoy a tax cut.

The increase of as much as €700 a year for a single-income family on €40,000 a year will come as a result of a huge jump in the amount of universal social charge (USC) paid by up to 360,000 people.

The hike arises from the ending of a special 4pc USC rate which was applied to certain categories of taxpayer when the hugely controversial tax was introduced in 2011. The people affected will be charged 7pc from next January.

At the same time high-earning self-employed people such as barristers, consultants, solicitors and business owners who earn more than €100,000 will benefit from a cut in their USC rate from 10pc to 7pc.

Speaking on RTE’s News At One today, Finance Minister Michael Noonan pointed the finger of blame at Fianna Fail.

The minister said that Fianna Fail, when last in government, made a deal with the Independent TDs who supported them in government to delay this increase until January 2015.

Mr Noonan said the this hike is “part of financial law”.

But he stressed a budget would take place in October, and everything would be considered.

“These things are manageable,” he said.

The hike emerged as Taoiseach Enda Kenny admitted that the vast majority of Irish people “do not feel the joy” of the economic recovery.

In an interview with CNBC he accepted that families paid the price for the collapse of the banks and said the fruits of recovery have not been experienced by most.

But he reiterated the Government’s stance that workers will be rewarded in terms of taxation measures in the upcoming Budget.

The changes to the USC were confirmed by Finance Minister Michael Noonan.

The 4pc rate currently applies to people with medical cards, as long as their income does not exceed €60,000.