PRSI on unearned income

J

jpd

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With regards to the information in today's Irish Times, presumably from a "well-informed" source, the Government is considering charging PRSI on un-earned income ie interest, rent, etc

This will add to the complexity of out taxation system (lots of jobs for public servants) - there is talk of getting rid of the health levy, income levy, simplying the PRSI charging system and other good intentions, but it is not often that existing taxes are eliminated. Normally they are re-adjusted to apply to fewer and fewer cases - again more complex calculations. It is a case of being closer to Boston than Berlin.

Is it not time to revamp the whole system and just have a flat income tax, or 2 rates even, which is applied to all income (including Social Welfare payments) and with no additional exemptions for anyone. This would undoubtly be a great advance in taxation - although it would probably put a few tax accountants out of business!
 
The PRSI & levies system has become more complex ( computation wise ) in recent years. However the self-assessed taxpayer is already paying PRSI and levies on unearned income. A sole trader with deposit interest and/or rental income and who hits the relevant thresholds pays PRSI and Health Contribution on these sources of "unearned income" already, and always has. The potential to collect PRSI and Health Contribution would seem to be limited therefore to those taxpayers whose income is largely from PAYE sources and who are not already obliged to file self-assessed returns. One might wonder therefore at the actual potential additional take from such sources.
 
Graham_07 said:
One might wonder therefore at the actual potential additional take from such sources therefore.
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Therefore I could not understand this 'news item' as PRSI is already paid on rent (excluding the rent a room scheme) etc.
Now... Health Levy is the one to watch, actually I think they have the two mixed up..........
 
It could actually be very easy to introduce this. If they
-scrap the upper and lower limits
-scrap the various rates so everyone pays the same, regardless of income or type of work
-scrap any and all exemptions
-roll the various levies into it

suddenly what you have then is a flat rate tax applicable to all called PRSI. It would be easy for banks to apply it on interest for example, similer to DIRT. Anyone who earns income outside PAYE could then be charged when they do a tax return.
 
+1 It is called the Universal Social Contribution, as announced last budget!
 
Mpsox said:
It could actually be very easy to introduce this. If they
-scrap the upper and lower limits
-scrap the various rates so everyone pays the same, regardless of income or type of work
-scrap any and all exemptions
-roll the various levies into it

suddenly what you have then is a flat rate tax applicable to all called PRSI. It would be easy for banks to apply it on interest for example, similer to DIRT. Anyone who earns income outside PAYE could then be charged when they do a tax return.
Click to expand...

Or even scrap all of them and set the higher rate of income tax at 50% and the standard rate at 30%. Dirt could be aligned to the standard rate.

A segregated social welfare fund is a joke. After 10 years of full employment it takes just two years of increasing unemployment to exhaust it.

There is no point in having a national debt, social fund, national pensions reserve as separate pots.

Someone had a bit of sense in the last budget and aligned the levies and PRSI so that higher levies in excess of €75k offset the PRSI ceiling. I find it daft that people still believe that there is a celing to be removed at the €75k mark, despite other levies increasing at the same level of income. The next sensible step is to combine income levy, health levy, prsi & income tax to reduce complexity, improve tranparency and ensure equity
 
Just on the point of the Social Ins Fund.

It is not designed to build up a surplus (unlike a typical pension fund, for example).


Example:

Year 1 - income = 100, payments = 95, it happens to run a surplus of 5 that is carried forward. But this is not planned.

Year 2 - income = payments = 100

Year 3 - income = 100, payments = 105 due to higher unemployment, so the past surplus is used up.

BUT, the fund is not "used up".
 
DerKaiser said:
A segregated social welfare fund is a joke. After 10 years of full employment it takes just two years of increasing unemployment to exhaust it.

There is no point in having a national debt, social fund, national pensions reserve as separate pots.
Click to expand...

nOTE that most countries DO have separate social ins funds, and there are good reasons for that.
 
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