Up to 1994, employers' pay related social insurance (PRSI) was applied at a standard rate of 12.2 per cent, subject to an annual ceiling, on all wages regardless of the level of weekly earnings. A lower, incentive, rate of employers' PRSI of 9 per cent was introduced in the 1994 budget to reduce the burden of PRSI in low wage employments only. This reduction in PRSI was confined to low wage employments in order to make the best use of the available funds by maximising the relief given in respect of each job that qualifies. The maximum wage levels that qualify for the incentive rate of employers' PRSI in 1995-96 is £231 per week. Jobs paying wages above that level attract employers' PRSI at the standard rate.
The situation the Deputy refers to occurs when the wages offered by an employer are the maximum that qualifies for the incentive rate of employers' PRSI. When wages are greater than £231 per week (1995-96), the standard rate of employers' PRSI (12.2 per cent in 1995-96) applies on all wages. This is an inevitable consequence of a tiered rate structure of this nature.
Modifications to the present employer PRSI would have budgetary implications. These and other features of the system will be reviewed in 1996 in the light of the Report of the expert group on the integration of tax and social welfare.