Dáil Éireann debate -
Wednesday, 16 Apr 1997

Vol. 477 No. 6

Written Answers. - PRSI Reduction.

Dermot Ahern

Question:

9 Mr. D. Ahern asked the Minister for Social Welfare the cost in a full year of the 1 per cent reduction in PRSI for employees; the amount it would cost to provide a similar reduction through the training levy in the charges made on old age pensioners and low paid civil servants such as those on or below the average industrial wage; and if he will make a statement on the matter. [9926/97]

Minister for Social Welfare (Proinsias De Rossa)

The total full year cost of the 1 per cent reduction in PRSI for employees introduced in this year's budget is £79.4 million.

A similar 1 per cent reduction in the employment and training levy for old age pensioners and low paid civil servants, such as those on or below the average industrial wage, would in effect mean the removal of this levy which stands at 1 per cent. Confining the removal of the levy to those at or below the average industrial wage would entail raising the threshold from £10,250 per annum to some £15,000 per annum.

I am advised by the Revenue Commissioners that income tax statistics do not generally distinguish between individuals who have income from pensions and from other sources. The only relevant information available is in respect of all individuals aged 65 years or over, including individuals with incomes from pensions. In addition, the relevant distributional information available on civil servants relates to all public servants who are not liable to the full range of social insurance.

It is tentatively estimated that the cost of increasing the current threshold for the employment and training levy from £10,250 to £15,000 in respect of people aged 65 years and over, and public servants who are not liable to the full rate of social insurance, would be of the order of £5 million in a full year in terms of the income tax year 1997-8.

Introducing such a measure would, of course, add further significant complexity to an already complex tax, PRSI and levies system. Furthermore, as incomes under £10,250 are already exempt from the employment and training levy, as well as from the health contribution, such a measure would be of no benefit to people in the two groups in question with incomes under £10,250 per annum of £197 per week.