How come PRSI and USC don't fall in under the regular income tax?

AskPepe

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It seems like a way to not globally announce what the correct taxation is in a country. Do others countries have similar practices?
 
yes, is the short answer.

Most EU countries have a combination of income taxes and social security charges. The amount taken from each varies a lot but the total take is generally similar across the board. Some countries have a higher overall take with a correspondingly higher level of services provided by the state whilst others class themselves as low tax countries but do not provide much state services.
Unfortunately or not, Ireland is a middle country when it come to overall tax take but provides lower services than you would expect
 
Most countries have SI.

We have one main rate of PRSI for employees, 4%.

For comparison, Germany has four insurances for typical workers.

France is also complicated.

Our system is less complex, in comparison.
 
In many countries the amount of social insurance you pay (level and length of contributions) determines how much unemployment benefit and pension you get.

It's not really like that in Ireland where most benefits are flat rated and don't depend on length of contribution once you're over a certain threshold. Functionally, PRSI is effectively an income tax.
 
USC is an income tax too.
By calling it a "Charge", politicians were able to say, with a straight face, we haven't increased taxes - and we swallowed that line 100%

I agree that French tax and social insurance is complex for exactly the same reason - rather than increase income tax, a new charge is brought in.

I am not sure that our tax system is simple - between income taxes, DIRT, CAT, CGT, Exit tax, PRSI of all kinds and USC - they all follow different rules, have different thresholds and reporting requirements
 
The IMF noted in https://www.imf.org/external/pubs/ft/scr/2012/cr12265.pdf

"The Irish welfare system does not differentiate significantly between social insurance and social assistance, or between contributory and non-contributory state pensions. Accordingly, PRSI contributions do not bear a strong link to welfare benefits, so that it is acceptable to combine (employee) PRSI with income tax and USC when looking at personal income taxation in Ireland."

For comparison in Sweden for SI you pay 7% - up to a maximum of SEK29,400 (2,786 euro) a year.
The state pension that's paid then is salary/contribution related and capped at SEK 468,750 (44,418 euro).

That's how a SI type pension should work , not our system where we've
uncapped employee PRSI contributions​
capped pension which is unrelated to contribution levels​
pension level and commencement of payout is likely to adversely change​

It looks like anyone earning over 70k in Ireland is paying more in SI, as an employee, than their Swedish counterpart, for a product that worth a fraction of the Swedish version.

To make matters even worse the Irish government have started speculating about means testing the COAP - https://www.irishtimes.com/news/soc...s-should-not-be-equal-says-minister-1.3948076.