Interaction Between Welfare and Taxation

Chapter 10: Labour Markets and Social Protection Systems

10.1 The Commission recommends maintaining a low entry threshold for access to social insurance.

10.2 The Commission believes that a lower nominal rate of employee PRSI should apply to earnings below the employee PRSI contribution threshold, currently €352 per week.

10.3 The Commission recommends that, with a view to broadening the PRSI base, PRSI should be extended to all sources of employment income including, as a general rule, share-based remuneration.

10.4 The Commission recommends that those over State pension age pay PRSI on all income other than social welfare payments.

10.5 The Commission recommends removing the PRSI exemption on supplementary pension income (occupational and personal pensions, and public sector pensions).

10.6 The Commission recommends that, in the interests of solidarity, the rate of charge for PRSI on unearned income should remain aligned to the higher rate of PRSI applicable to employees on their income from employment generally.

10.7 The Commission recommends that cliff-edges in the taxation and welfare systems should be removed.

10.8 The Commission does not support the development of a Universal Basic Income in Ireland.

Chapter 11: Promoting Employment

11.1 The Commission recommends that secondary benefits for people of working age should be designed on a cross departmental basis to ensure coherence, with negative work incentives minimised and benefits targeted appropriately and effectively. To ensure appropriate integration and tapering of secondary benefits with the existing framework of income supports, an assessment of the impacts of any new benefit should be conducted before new schemes are introduced. Other departments should consult with and take advice from the Social Protection Department in respect of any means tested payments. All agencies making decisions on eligibility should have access to the same high-quality information.

11.2 The Commission notes that a number of recommendations in this report will affect the cost of employment and is cognisant of other policy developments (including, for example, changes in respect of statutory sick pay, auto-enrolment, etc.) that will also affect employers’ costs over the medium term. There is a need to coordinate and manage the phased introduction of such reforms. The Commission therefore recommends the establishment of appropriate coordination mechanisms to monitor the cumulative effect of policy-related labour cost changes on enterprise and the self-employed.

11.3 The Commission believes that only one rate of employer PRSI equal to the higher rate (currently 11.05%) should apply on all weekly incomes, and that the lower rate of employer PRSI, which currently applies on incomes up to €410 per week, should be gradually phased out.

11.4 To minimise the distinctions between legal forms and to treat similar activity in similar ways the Commission endorses the principle that the rate of PRSI on self-employment (Class S) should be aligned over time with the employer’s rate of Class A attaching to employment (currently 11.05%).

11.5 The Commission recognises that the USC surcharge on non-PAYE income above €100,000 does not comply with the principle of horizontal equity and recommends that the tax treatment for all income earners should be aligned.

11.6 The Commission recommends a phased move towards individualisation of the Standard Rate Cut off Point as a step towards addressing disparities in the Income Tax system, facilitating increased employment, and decreasing the gap in the employment rate between men and women.

11.7 The Commission recommends that the Public Employment Service (PES) should provide advice based on the employment trajectories of people with similar characteristics, with analysis of the outcomes of PES programmes informing the particular programmes at specific points in the economic cycle.

11.8 The Commission believes the range of Active Labour Market Programme offerings should be led by rigorous evidence and evaluation of their net impact on the jobseeker’s long-term employment prospects.

11.9 The Commission recommends expanding employment services to recipients of other income support payments. The Public Employment Service must be adequately resourced to deliver these services.

11.10 The Commission recommends that a model of employment services, similar to that currently in place for lone parents, be extended to qualified adults.

Chapter 12: Inclusive and Integrated Social Protection

12.1 The Commission recommends that Government undertakes a regular benchmarking exercise in respect of all working-age income supports (including supports for people who are unemployed, people with disabilities and people parenting alone), following which multi-annual targets should be set for social welfare rates which provide for regular incremental progress. Annual increases in social welfare rates should be based on a transparent and evidence-led process.

12.2 The Commission recommends that working-age payments should be reformed to move towards an income related working-age assistance payment available to all households. The payment should be designed so as to avoid subsidising low-paid employment.

12.3 The Commission notes the intention of the Government to introduce a greater element of pay-related benefits within the Social Insurance system. The Commission recommends that the design of such benefits should take account of incentives to work and the sustainability of the Social Insurance Fund. If introduced, any such benefit should be short in duration, subject to a cap, and progressively extended to include maternity, paternity, parents’ and illness benefit.

12.4 The Commission does not recommend that Child Benefit should be subject to tax.

12.5 The Commission recommends that the existing system of child income supports should be reformed to facilitate the introduction of an income related second tier of child income support in addition to Child Benefit that combines existing supports and that would be provided to all low-income households, whether in receipt of a social welfare payment or not.

12.6 The Commission recommends that the individualisation of payments made to qualified adults be progressed. This should be guided by the set of principles outlined by the Commission.

Sophrosyne said:

10.4 The Commission recommends that those over State pension age pay PRSI on all income other than social welfare payments.

Click to expand...

That's a daft idea. Take a 70YO on a state pension and still in employment. They can't qualify for more state pension, claim jobseekers benefit or disability benefit....why should they pay PRSI when it accrues no benefits.


It's already daft that employers PRSI is payable on the wages of people 66 and over.

NoRegretsCoyote said:

That's a daft idea. Take a 70YO on a state pension and still in employment. They can't qualify for more state pension, claim jobseekers benefit or disability benefit....why should they pay PRSI when it accrues no benefits.

Click to expand...

Most of them haven't contributed enough PRSI to pay for the pension they are getting. That's why there's such an issue with pensions and retirement age.

NoRegretsCoyote said:

It's already daft that employers PRSI is payable on the wages of people 66 and over.

Click to expand...

Who should pay for it?

I'd like to see individual retirement funds or accounts (the American's call them IRA's) so that every individual funds their own pension but if we are keeping the system we have then everyone needs to pay more, including retired people.

Sophrosyne said:

Chapter 10: Labour Markets and Social Protection Systems

10.1 The Commission recommends maintaining a low entry threshold for access to social insurance.

10.2 The Commission believes that a lower nominal rate of employee PRSI should apply to earnings below the employee PRSI contribution threshold, currently €352 per week.

10.3 The Commission recommends that, with a view to broadening the PRSI base, PRSI should be extended to all sources of employment income including, as a general rule, share-based remuneration.

10.4 The Commission recommends that those over State pension age pay PRSI on all income other than social welfare payments.

10.5 The Commission recommends removing the PRSI exemption on supplementary pension income (occupational and personal pensions, and public sector pensions).

10.6 The Commission recommends that, in the interests of solidarity, the rate of charge for PRSI on unearned income should remain aligned to the higher rate of PRSI applicable to employees on their income from employment generally.

10.7 The Commission recommends that cliff-edges in the taxation and welfare systems should be removed.

10.8 The Commission does not support the development of a Universal Basic Income in Ireland.

Click to expand...

On balance I'd be in favour of that.

Chapter 11: Promoting Employment

11.2 The Commission notes that a number of recommendations in this report will affect the cost of employment and is cognisant of other policy developments (including, for example, changes in respect of statutory sick pay, auto-enrolment, etc.) that will also affect employers’ costs over the medium term. There is a need to coordinate and manage the phased introduction of such reforms. The Commission therefore recommends the establishment of appropriate coordination mechanisms to monitor the cumulative effect of policy-related labour cost changes on enterprise and the self-employed.

I would be interested in hearing the views of people who have their own businesses as to how the totality (not just those mentioned above) of the Commissions recommendations would affect their business.

Does that mean that my Annuity qualifies for PRSI

Your annuity qualifies for class M Prsi.