Significant increases in PRSI proposed for workers and bosses

The government has been urged to introduce significant increases in PRSI payments to employees, employers and the self-employed from 2023. The call comes in pre-budget papers prepared by senior public servants.

1.5 percentage point increases in most PRSI rates over years are needed to fill the emerging gap in the Social Insurance Fund, which has been hit hard by the pandemic, according to tax strategy papers in which civil servants outline upcoming budget options.

Under the proposals, the PRSI rate paid by most employees would rise 4 per cent to 4.5 per cent in 2023 and increase by another half point in both 2025 and 2027 to reach 5.5 per cent. The fee will also start at lower profit levels than it currently is – with weekly earnings equivalent to around €13,000 per year, compared to €18,300 now.

Previous tax strategy papers have highlighted that self-employed people get most benefits from the Social Security system but pay PRSI at a rate much lower than the combined employer/employee contribution for those employed. The paper recommends a significant increase for this group from 2023 onwards, with the PRSI they pay increase from 4 percent now to 5.5 percent in 2023 and 1.5 percentage points each year through 2027 as well as a final percentage point increase in 2028 to reach a rate 12.55 percent.

Employers will also face higher payments. They currently pay a PRSI of 8.8 per cent on earnings under €398 per week and 11.05 per cent for amounts above that. Newspapers are calling for that rate to rise to a single rate of 12.55 percent by 2027, and again with increases beginning in 2023.

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The Social Security Fund has slipped into deficit due to the pressures of the pandemic, which has led to more claims and less money being paid. This has translated €3.9 billion at the end of 2019 into a projected shortfall of €3.8 billion this year.

Additional revenue from the proposed price increases will reach €3.6 billion per year by 2027.

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