The Government has dismissed suggestions the Universal Social Charge (USC) should be abolished, as well as calls for a mini giveaway budget in the spring.

Both suggestions were made by Government backbenchers over the weekend but ruled out as impractical.

A senior Government source pointed out that the USC brought in over €4 billion a year in revenue to the exchequer and massive cuts in essential services would be required if it was abolished.

“We have moved to reduce the impact on the lower paid in the budget for 2015 and a further move in that direction has been signalled for inclusion in the budget for the following year,” he said.

Former minister and Labour TD Pat Rabbitte also ruled out the move.

‘Fanciful’

“The notion that you can abolish it at a stroke, I’m afraid, is fanciful,” he told RTÉ’s

The Week in Politics

.

“The Labour Party’s continuing objective in relation to USC is to continue to moderate it and to continue to restructure and reform it.”

Jack O’Connor, the leader of trade union Siptu, said he would like to see the USC replaced by a progressive tax with an emphasis on wealthier people and higher incomes.

He said the aim was to alleviate the burden on those between the minimum wage and the standard tax threshold.

Siptu have put down a motion of the Labour Party conference in February proposing the replacement of the tax.

The USC was introduced by the previous government and amounts to a tax on almost all income. It was introduced in January 2011 and has played a significant role in reducing the budget deficit.

On taking office the Coalition raised the threshold on which USC was paid, taking 330,000 workers out of the net. In his recent budget Michael Noonan said incomes of €12,012 or less would be exempt from January 1st.

At the weekend junior Finance Minister Simon Harris said more than 80,000 of the lowest-paid workers in the State would no longer pay USC from January as a result of the budget, bringing to 410,000 the number of people the Coalition had exempted.

He said the level of USC on people paying the standard rate of tax had also been significantly reduced.

Budget lite

Proposals from backbenchers that a mini-budget be introduced in the spring have also been rejected. “There will not be any new budget measures until the next budget in October 2015,” said a Government spokesman.

He did not rule out some form of statement in the spring outlining Government priorities, but said nothing had been decided at this stage.

It emerged last week that some Labour figures are in favour of a spring budget statement to detail the Government’s economic priorities for the rest of the year.

Already the Government provides the EU Commission with a fiscal stability update each spring. Labour advisers believe this could form the basis of a more easily communicated statement to the electorate on economic priorities.

Fianna Fáil spokesman on Finance Michael McGrath described the notion as having more do with the deteriorating electoral fortunes of Fine Gael and Labour than any genuine attempt to have meaningful debate on the economy.

“The Government parties are clearly frustrated that October’s budget has been completely overshadowed by the farce they have created in Irish Water. The suggestion that the Government suddenly think it is a good idea to have a spring statement on the economy in the run-in to a general election will be treated with the cynicism it deserves.”