Integration of PRSI and USC

I note that the Report of the Working Group on the Amalgamation of USC and PRSI has been published.

The Group’s terms of reference were:

“To examine and present options for the amalgamation of PRSI and USC in a manner which seeks to address, inter alia:

(i) the need to preserve the tax base having regard to the need for certainty, equity, and ease of compliance and administration,

(ii) current and future funding challenges facing the Social Insurance Fund,

(iii) issues likely to arise from a phased implementation over a number of years of the new instrument,

(iv) simplification of the personal tax and social insurance systems, and

(v) any other relevant matters arising.

The key finding of the Group was:

“Amalgamation of USC and PRSI is technically feasible and there are a number of options to achieve this. However, the Group concluded that it was not possible to identify a single approach which at once is simple in design and implementation, minimises the costs to the State and avoids losers at the individual income earner level.

All possible options or variations thereof involve trade-offs between these three factors and raise significant parallel policy choices for Government as well as the resolution of practical implementation issues which arise.


This is a summary from the Irish Times, “The working group considered various ways this option could be achieved. However, all but one involved a significant loss for the exchequer of between €617 million and €1.08 billion.


This is the Group's report.

In Ireland back in 2010 earning 54K employees prsi was 9% now it is 4% , how come there is a problem putting it back the way it was,

How about merging all taxes into one simple tax with only one tax free allowance - with two bands?

Get rid of allowances, credits,etc - no more niche tax shelters, no multiple PRSI and USC calculations

Adjust the tax free allowance and rates to get the same tax take as now and reduce the number of public servants required to administer and control the existing myriad systems

josh8267 said:

In Ireland back in 2010 earning 54K employees prsi was 9% now it is 4%

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I can't remember the rates.

But did they not bring in USC as well? So the net rate is not that much lower.

But I agree. We can't pay the huge pension levels from the age of 65 with people contributing only 4% of their income.

Brendan

Brendan Burgess said:

I can't remember the rates.

But did they not bring in USC as well? So the net rate is not that much lower.

But I agree. We can't pay the huge pension levels from the age of 65 with people contributing only 4% of their income.

Brendan

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You don't have to remember the rates Just Google SW14 2010 in fact it should bring you to PRSI contribution rates SW14 back to 2002,
Just for the record in 2010 payroll deduction going into the prsi fund for each worker included an extra 10.75% from employer along with employees total 19.75% of payroll ,If I remember correctly for every six workers earning around 300K in payroll something like 54K went into prsi fund ,
I haven't check the above figures in a while but the above figures should be close enough,

You should chart the total deductions e.g.

Income Tax
USC
PRSI and levies

for each year to see how they rose and fell.

Brendan

josh8267 said:

In Ireland back in 2010 earning 54K employees prsi was 9% now it is 4% , how come there is a problem putting it back the way it was,

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It is not a question of reverting to the 2010 position.

Have a look at the Group's terms of reference above.

josh8267 said:

In Ireland back in 2010 earning 54K employees prsi was 9% now it is 4% , how come there is a problem putting it back the way it was,

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To clarify this, in 2010 the main ee rate of PRSI was 4%.

The Health Contribution was 4% and 5%.

The Health Contribution was collected in with PRSI, and there was typically one deduction on a payslip.


I don't know if the Health Cont went into the SIF, I don't think so.


Note that the Health Levy has been replaced by the USC.

jpd said:

How about merging all taxes into one simple tax with only one tax free allowance - with two bands?

Get rid of allowances, credits,etc - no more niche tax shelters, no multiple PRSI and USC calculations

Adjust the tax free allowance and rates to get the same tax take as now and reduce the number of public servants required to administer and control the existing myriad systems

Click to expand...

You are implying the abolition of the Social Insurance system?

Brendan Burgess said:

We can't pay the huge pension levels from the age of 65 with people contributing only 4% of their income.

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Is Employer PRSI not essentially another contribution people make? They could otherwise be earning that money (10.75% of their salary, or whatever) if the employer didn't have to pay it directly to the State.

michaelm said:

They could otherwise be earning that money

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They could. Or the employer could find other uses for the money (hiring another employee, reinvesting in his business, paying himself a bigger dividend, etc.).

Protocol said:

You are implying the abolition of the Social Insurance system?

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I don't believe in cookie jars for state finances, and I don't think Governments do either.

The taxes in are used to pay for services, payroll, social payments, etc, etc

The Social Insurance would still work - taxes paid = social insurance points, no taxes paid = no points

There is a reason SI systems exist in many countries.

If we abolish SI, then two alternatives are:

Means test all welfare payments

Make more welfare payments universal