I assume the Deputy is referring to the recent TASC report regarding the step effect in the PRSI system which brings all income into charge once the relevant threshold is reached. While such an effect is never ideal, it is necessary to achieve the desired yield, which in itself contributes to keeping workers on incomes lower than the threshold to remain outside the charge to employee PRSI entirely. However it should be noted that the cohort identified being affected by this step effect do not ordinarily pay income tax on the first €16,500 of their income because of the PAYE and personal tax credits, and in some cases, depending on eligibility for additional credits, they may be exempt from the income tax charge entirely.
The potential cost of addressing this step effect must be viewed in the context of the constrained fiscal environment in which we find ourselves. Under the terms of the Stability and Growth Pact, until Ireland has reached its objective of a balanced budget in structural terms, we may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means that Government must consider carefully any tax changes as any reductions will have to be offset elsewhere.