Willie Penrose
Ceist:43 Mr. Penrose asked the Minister for Social, Community and Family Affairs the likely increase in the social insurance fund as a result of the removal of the annual earnings ceiling for employers in 2001. [5733/01]
Written Answers. - Social Insurance Fund.
A broad range of PRSI changes were announced in Budget 2001. These included the abolition of the employer PRSI annual earnings ceiling; a reduction in the main employee rate of PRSI from 4.5% to 4%; a restructuring of PRSI for the self employed involving a reduction in the self-employed rate of PRSI from 5% to 3% accompanied by the abolition of both the annual earnings ceiling and the annual PRSI free allowance.
The estimated yield to the social insurance fund arising from the abolition of the employer ceiling is £24 million in 2001 and £159 million in a full year. The overall PRSI budgetary package will result in a cost to the fund of an estimated £7 million in 2001 and a yield of around £117 million in a full year.
My colleague, the Minister for Finance, has already stated in this House that PRSI changes announced in the recent budget are the first steps in the process of the simplification and rationalisation of the overall PRSI and levies system and that this process will be continued in the future. He also made it clear that the abolition of the employer ceiling must be seen in the context of other measures which have provided, and will continue to provide for substantial reductions in business taxation. For example, changes in corporation tax in the recent budget alone will benefit employers by £214 million in a full year. It should also be seen in the context of reductions in the levels of PRSI payable by employers in recent years.
Social insurance levels are low when compared with our European partners and this will continue to be the case following the recently announced changes. For example, the combined employer and employee contribution payable in Ireland is lower at all income levels above £136 per week than its UK equivalent when compared on a pound for pound basis. Indeed it should be noted that there has been no ceiling on employer contributions in the UK for many years.