IBEC opposes reducing the Universal Social Charge in Budget 2018

The Irish Business and Employers’ Confederation (IBEC) has spoken out against the prospect of the Fine Gael party cutting the Universal Social Charge (USC) in the upcoming Budget 2018.

Fergal O’Brien, chief economist, IBEC, spoke before an Oireachtas Committee and warned that USC reductions “would not be the best use of resources” for the next Budget.

Mr O’Brien told TDs and Senators that a reduction in USC would only serve to further narrow Ireland’s tax system. He cited instances from businesses where professionals earning below €34,000 have refused overtime for fear of falling into the next income tax band.

Earlier this month, Ireland’s Minister for Finance, Paschal Donohoe confirmed his party’s priority in Budget 2018 is to deliver “steady and affordable progress to reduce high tax rates for low and middle-income earners”.

Mr O’Brien said many companies across the country were also “overwhelmed with the challenges and uncertainties” resulting from the UK’s negotiations to leave the European Union (EU).

"For a lot of businesses it has been a slow burn,” said O’Brien.

"We saw some sectors quickly diagnosing what it was going to mean for them almost immediately, starting their contingency planning, looking at their supply chain exposure, predominantly in the food industry which I think is very advanced in terms of its awareness and planning for the UK’s withdrawal, and also in traditional sectors.

"In the SME sector there are a lot of managers overwhelmed with the uncertainty and challenges posed by this outcome.

"They might not see a direct exposure to the UK but there is lots of companies with indirect exposures that they haven’t recognised yet. I think there is a lot of awareness raising to be done.”

Date published 21 Sep 2017 | Last updated 21 Sep 2017