Leo Varadkar to move away from abolishing the USC

Fine Gael leadership hopeful Leo Varadkar is expected to propose a move away from his party's signature policy of abolishing the Universal Social Charge (USC) as part of his pitch to succeed Taoiseach Enda Kenny.

It is understood the Minister for Social Protection will emphasise the need to reform income tax instead, in particular the need to raise the threshold at which people enter the higher rate of income tax, The Irish Times has learned.

For a single person, the higher rate of income tax of 40 per cent kicks in at €33,800.

Mr Varadkar is expected to outline his plans this weekend.

Tánaiste was ‘aware’ of fixed charge notice problems last June

---

All-male meeting discussing US maternity care sparks outrage

---

Fixed charge notices debacle: Who is affected and who is not?

---

Putin hosts French far-right leader Marine Le Pen in Moscow

---

The news follows a number of weeks in which his main rival in the contest to succeed Mr Kenny, Minister for Housing Simon Coveney, has been gaining momentum.

Mr Varadkar had previously been seen as the frontrunner by a considerable distance. However, the leadership race is now believed to be extremely tight.

Bookmakers have also slashed their odds on a Coveney victory.

It is understood Mr Varadkar will propose that the USC be merged with PRSI to create a more contributory system for State benefits.

It is understood the USC could still be reduced as part of this new system.

With Mr Coveney’s bid expected to focus on social policy, supporters of Mr Varadkar hope he can mark out his candidacy through centre-right economic and taxation positions.

Election pledge

One of Fine Gael’s key policy planks in the last general election was a promise to phase out the USC, the charge on income introduced in 2011.

The election pledge was criticised as unaffordable, even though the party argued that abolition of the USC over a number of years could be achieved if economic growth continued.

The programme for Government pledges that at least two-thirds of any extra resources available in the annual budget should go on additional spending, with at most one-third devoted to tax cuts.

The policy positions outlined by Fine Gael leadership candidates in the coming weeks are more likely to feed into the party’s next election manifesto than current Government policy.

The Government's taxation policy is restricted at present because of the confidence and supply agreement between Fianna Fáil and Fine Gael.

Taoiseach Enda Kenny this week indicated that he will stand down after the European Council summit on April 29th, which will consider the EU's Brexit negotiating guidelines.