Dail Éireann · 2023-12-07
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I ask the Minister for Social Protection if she will consider raising employers' PRSI to the EU average. Following Government decisions in response to the report of the Commission on Pensions and the publication of the Actuarial Review of the Social Insurance Fund, it was agreed that the Minister would bring forward a roadmap for PRSI changes as one of the primary means of addressing the projected shortfalls in social insurance income.
In recognition of the long-term sustainability challenges facing the Social Insurance Fund, in budget 2024 the Government agreed to incrementally increase all PRSI rates on employer, employee and self-employed by 0.4 percentage points over the period 2024 to 2028. A further review of the adequacy of the social insurance rates will be carried out once the next actuarial review is completed in 2027.
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I ask the Minister for Social Protection if she will consider raising employers' PRSI to the EU average. I am surprised that the question is being taken now. I had submitted it to the Department of Finance, which rejected it and said it was not under its remit, and it has turned up here.
According to data compiled by my Department, the average employer social insurance contribution rate across the EU stands at approximately 19.5%. Ireland's current higher employer social insurance rate is 11.05%. However, it is important to note that social insurance rates across Europe are not directly comparable as different benefits, thresholds and ceilings apply across each member state. Following Government decisions in response to the report of the Commission on Pensions and the publication of the Actuarial Review of the Social Insurance Fund, it was agreed that the Minister would bring forward a roadmap for PRSI changes as one of the primary means of addressing the projected shortfalls in social insurance income. This approach was agreed as an alternative to increasing the State pension age.
In recognition of the long-term sustainability challenges facing the Social Insurance Fund, in budget 2024 the Government agreed to incrementally increase all PRSI rates on employer, employee and self-employed by 0.4 percentage points over the period 2024 to 2028. As a first step, rates will increase by 0.1 percent from October 2024. A further review of the adequacy of the social insurance rates will be carried out once the next actuarial review is completed in 2027. I am satisfied that the approach decided by the Government achieves a fair balance between addressing the long-term sustainability of the Social Insurance Fund, without unduly impinging on the incomes of workers and the cost of doing business in Ireland.
I hear what the Minister of State is saying. There was an agreement to increase employers' PRSI in relation to State pensions. Research by SIPTU shows that increasing employers' PRSI to the EU average would provide an extra €10 billion, similar to what we spend on education each year.
The Nevin Institute has said the tax revenue from employees exceeds the EU average while employers are undertaxed. It went on to say that the Republic's low overall implicit tax rate on labour arises because employers in the Republic have an implicit tax rate of just 9.2% compared with 17% for the EU as a whole. Ireland sits 27th in Europe for employers' contributions to social insurance. We need to take a serious look at employers' PRSI contributions. We could use €10 billion for public services. It could be phased in with significant support for SMEs and still increase revenue receipts. It needs to be seriously looked at.
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I am sorry, Minister, tá an t-am caite.