Dáil Éireann debate -
Tuesday, 20 Nov 2001

Written Answers. - Tax Yield.

Paul McGrath

Question:

262 Mr. McGrath asked the Minister for Finance the estimated extra return to revenue resulting from the abolition of the employee PRSI thresholds at the present rate of PRSI, if the present rate is reduced by 1% and if the present rate is reduced by 2%. [28765/01]

Minister for Finance (Mr. McCreevy):

I assume the Deputy is referring to the threshold at which persons enter the PRSI net and not the ceiling at which they leave it. The PRSI free exemption threshold is £226 – 287 – per week and applies to employees in classes A, E, B, C, D and H. The estimated extra revenue or yield from the abolition of the PRSI free exemption threshold for class A PRSI contributors, which represents the majority of contributors, is £30.5 million – 38.7 million, in a full year.

The PRSI income would drop very considerably if the contribution rate for these classes were reduced by 1% or 2%. If such reductions were put in place and if the thresholds in question were then abolished, then the yield from the abolition would be reduced considerably. At a contribution rate of 3% the yield would be £23 million – 29.2 million – and at 2% the yield would be £15.25 million – 19.36 million – in respect of class A contributors.

If, on the other hand, the question is about the yield from abolishing the employer PRSI ceiling, the position is as follows. The additional full year PRSI yield from the abolition of the employee ceiling for all classes would be £129 million – 164 million. Reducing the employee PRSI contribution rate by 1% and 2% respectively, would in a full year cost £157 million – 199 million – and £314 million – 399 million. If at the same time, the ceiling were to be abolished these costs would be reduced by the £129 million – 164 million – referred to earlier in this paragraph.