Vol. 544 No. 1
169 Mr. Kenny asked the Minister for Finance if he has reviewed the effects of the abolition of the employers' PRSI ceiling; his views on whether this measure has increased the cost of employment for many companies; his further views on whether this is a prudent measure in the current economic climate; and if he will make a statement on the matter. [28165/01]
I set out in my budget speech the background to the abolition of the PRSI contribution ceiling for employers. As I said at the time, the initiative had to be seen in the context of the substantial reductions in business taxes in the 2001 and previous budgets. In addition, I also announced in the budget a significant change in the capital allowances regime for plant and machinery which substantially benefited a wide range of enterprises.
The abolition of the ceiling affected only employers where their employee's annual salary was greater than £36,600 –€46,472. In addition, the measure had little impact in 2001 due to the short tax year. Our Employer PRSI system continues to compare very favourably with the EU norm. Moreover, I am not aware the abolition has had any effect on employment from the data I have seen.
I recently met with the representatives of the main employers' organisations as part of the pre-budget process and I noted all their concerns and suggestions, which I will bear in mind when framing my budget. They are also fully aware of my intention to continue to reform and simplify the PRSI system which has been very complex and cumbersome from an operational perspective over many years.
