Dáil Éireann debate -
Tuesday, 22 Mar 1994

Vol. 440 No. 4

Written Answers. - PRSI Changes.

Donal Carey

Question:

109 Mr. Carey asked the Minister for Social Welfare if he has received representations regarding the budget changes in PRSI in view of the fact that they affect manufacturing companies; and if he will make a statement on the matter.

Minister for Social Welfare (Dr. Woods)

There are three main PRSI changes announced in the budget and given legislative effect in the Social Welfare Bill currently before the Oireachtas. They are:

—the introduction of a two-tier employers' PRSI contribution structure, with a new lower rate of 9 per cent applying in respect of employees earning less than £173 per week,

—extension of the employers' PRSI exemption scheme under which employers pay no PRSI for two years in respect of new employees taken on from the live register,

—the waiving of the employer's liability to pay the health contribution and employment and training levy on behalf of employees who hold medical caards.

These changes taken together with measures on the employee side such as improvements in Family Income Supplement and the abolition of the temporary 1 per cent levy, add up to a substantial package of measures designed to provide a stimulus to employment and economic growth. They concentrate on the lower end of the income scale where the tax/social insurance wedge was seen as having the greatest effect on employment.

The response to the package of measures as a whole from commentators and employers has been positive.

I have received a copy of the representations to which the Deputy refers in the material supplied with his question. These refer specifically to the increase in the ceiling on employers' contribution to £25,800. The introduction of the package of PRSI measures cost the social insurance fund some £46 million. The ceiling was increased to £25,800 instead of £22,200 to which it would have moved in line with inflation to partially fund the concession at the lower end of the income distribution.

I recently met a delegation from IBEC to discuss this issue. I have undertaken to monitor over the coming months the impact of the ceiling increase and the effects of the measure on PRSI income to the fund. The views of the organisation concerned will be taken into account in this context.