Damien English
Question:47 Mr. English asked the Minister for Finance the cost of eliminating the minimum wage from the income tax code and from the PRSI code. [30150/03]
Written Answers. - Tax Code.
I assume the Deputy is referring to the new minimum wage of €7 per hour, which will apply from 1 February 2004 and which is equivalent to an annualised figure of €14,196.
I am informed by the Revenue Commissioners that the full year costs to the Exchequer of the change mentioned by the Deputy through an increase in the employee – PAYE – credit would be €315 million in a full year, or, if the personal credit were used, €473 million in a full year. If the personal and employee credits each bore half the required increase, the full year cost would be €395 million. These figures are estimated by reference to projected 2004 incomes and assuming the enactment of the changes already announced in the 2004 budget. They are also provisional and are likely to be revised.
On PRSI – employees' social insurance contribution – it is unlikely that the issue will arise in respect of persons in receipt of the minimum wage. The class A employee contribution of 4% of earnings is not payable if weekly earnings are at €287 per week or below. This amount corresponds to 41 hours' work at the minimum wage of €7 per hour as it will apply from 1 February 2004. If the usual assumption of a 39 hour week is made when annualising the minimum wage, PRSI will not arise.