Written Answers. - Social Insurance.
Paul McGrath
Question:
142
Mr. McGrath
asked the
Minister for Finance
the number of workers who had income above the employee PRSI ceiling in each of the past five years; the estimated average annual savings to those workers; if those workers enjoyed a PRSI holiday in previous tax years; and the reason most of those workers will not receive a similar PRSI holiday in the shortened tax year 5 April to 31 December 2001.
[3931/01]
I am informed by the Revenue Commissioners that the number of individual employees with reckonable income in excess of the PRSI contribution ceiling for each income tax year from 1996-97 to 2000-01, and the estimated annual average benefit to those employees from the non-application of social insurance contributions to income in excess of each year's ceiling is estimated as follows:
|
Year
|
Numbers
|
Average annual benefit
|
|
|
£
|
|
1996/97
|
216,900
|
340
|
|
1997/98
|
258,700
|
303
|
|
1998/99
|
277,100
|
322
|
|
1999/00
|
285,800
|
337
|
|
2000/01
|
304,400
|
352
|
It is not possible to ascertain precisely the extent to which employees who benefited in one year from the non-application of social insurance contributions to income exceeding the PRSI ceiling did so more than once, but the indicative information available suggests that most would have benefited over a number of years.
As I have said in a recent reply on this topic, the "PRSI holiday" issue is of relevance only to the minority of employees, an estimated 13%, who will have annual earnings above the contribution ceiling of £28,250 which will apply from next April. When annual earnings are in excess of the relevant contribution ceiling, employees have a period in each contribution year in which no contribution is due; the duration of this period depends on the level of annual earnings and the point in the tax year at which the earnings ceiling is reached. Up to this, ‘PRSI holidays' tended to be concentrated mainly in the first quarter of the calendar year in the lead up to the end of the tax year on 5 April.
Prior to the decision to align the tax and calendar years from January 2002, relevant employees could have expected a contribution holiday mainly in the first quarter of 2002. Arising from this alignment, their contribution holiday will be deferred until the final quarter of 2002. Leaving the contribution ceiling intact for the short calendar year does not impose any additional PRSI liability on the employees involved, as they will continue to have two ‘PRSI holidays' over the two year period from 1 January 2001 to 31 December 2002, as they would have had prior to the changeover, although the second holiday period will now mainly be in the final quarter of 2002. For those employees whose earnings exceed £28,250 in the period from 6 April to 31 December 2001, no PRSI contributions will be payable from the point in the period the earnings ceiling is reached until 31 December 2001.
Most employees will benefit from a reduction of 0.5% to 4% in the contribution rate of PRSI, effective from 6 April 2001.
