I move:
That the Social Welfare (Alteration of Rates of Contributions) Regulations, 1974, proposed to be made by the Minister for Social Welfare and laid in draft, sanctioned by the Minister for Finance, before Dáil Éireann on the 31st day of December, 1973, under subsection (9) of section 6 of the Social Welfare Act, 1952, be approved.
The need for these regulations arises as a direct consequence of the introduction of the pay-related benefit scheme. Under that scheme, pay-related benefit will be payable to persons in the form of a supplement to certain flat rate benefits during illness or unemployment. The rate of benefit will be calculated on the part of the claimant's reckonable weekly earnings in a previous income tax year, which lies between £14 and £50. To finance the scheme a pay-related contribution amounting in all to 3 per cent of the employee's current earnings will be charged of which the employer will bear 2 per cent and the employee 1 per cent. The contributions will be collected by the Collector-General of Revenue through the income tax system mainly with PAYE. In order to facilitate the collection of contributions, it is necessary to charge contributions on all earnings up to the ceiling of £2,500 in the year. The effect of this will be that pay-related contributions will be levied on pay up to £700 in the year, which is the equivalent of £14 a week for pay-related benefit purposes. This pay will not attract any pay-related benefit and there will thus be what amounts to an overcharge of pay-related contributions on it. It is therefore necessary to compensate employers and employees for this overcharge and the most practical way in which this can be done is by reducing the flat rate contributions.
The purpose of these regulations is to make appropriate reductions in the flat rate social insurance contributions payable in respect of persons who will be within the scope of the pay-related benefit scheme. The rates being reduced are the ordinary rates which are payable in general by persons in industrial, commercial and services-type employments and the special rates payable by male and female agricultural workers, who are being brought into the scheme by regulations, drafts of which have already been approved by this House.
The amount of the reduction proposed for the 3 per cent levied on pay up to £14 a week is 42p per week and, as the employer is liable for 2 per cent of the pay-related contribution as against the employee's 1 per cent, his element of the flat rate contribution is being reduced by 28p per week while the employee's element is being reduced by 14p per week. These reductions being in a flat rate contribution are of necessity themselves flat rate and affect all persons paying the contributions equally regardless of earnings.
The liability for pay-related contributions will commence as from Saturday, 6th April, 1974, which is the start of the 1974-75 income tax year, and I propose that the reduction in the appropriate flat rate contributions should take effect as from Monday, 1st April, 1974, which is the start of the first contribution week in that year.
The regulations for this purpose which it is proposed to make under subsection (9) of section 6 of the Social Welfare Act 1952, may not be made until a resolution approving of the draft regulations has been passed by both Houses of the Oireachtas.
I recommend the draft regulations for the approval of Dáil Éireann.
