Welfare payment boost for high earners

Higher income earners will initially get enhanced social welfare payments if they lose their jobs, under plans being developed by Social Protection Minister Leo Varadkar.

Under the scheme, higher income earners who have made significant contributions to the PRSI system, will stand to receive higher state welfare payments than those on lower incomes and those who have never paid PRSI.

The Irish Examiner understands that on losing one’s job the first elevated payment above the standard job seekers rate of €188 per week would apply for a period of three months, before being reduced to another rate about the basic rate.

If the person has not found a job a second rate would apply for another three months before the basic rate kicks in.

Mr Varadkar has confirmed his department is examining the possibility of having a sliding scale of social welfare payments, and a policy paper has been completed.

It is believed it was commenced when former Tánaiste and Labour leader Joan Burton was the line minister.

“My department have just done a paper on that now. The standard rate for job seekers is €188 a week and they modelled what it would cost if they made it €215 for the first three months and then €200 for three to six months and then it would go down to €188,” he said.

“The cost of doing that is in the region of €34m to €35m,” he revealed.

Mr Varadkar has expressed his personal support for the idea and has said it will be a matter of negotiation between himself and Public Expenditure Minister Paschal Donohoe ahead of October’s budget.

“I do think that it is a good idea, but what I will have to do in the run-up to the budget is negotiate with Minister Paschal Donohoe and I am sure my list of priorities will be more expensive than what he can allocate to me and there are other priorities too,” he said.

He added that he would not be linking social welfare payments to the salary of the person before they become unemployed.

“It’s not that I am saying that it should be a percentage of somebody’s income. I am not saying that because you earned €60,000 before you became unemployed that you should get more than somebody who earned €40,000.

“What I am saying is that if somebody loses their job and they have been paying into the PRSI system for years they should initially receive a higher job seeker’s benefit than people who haven’t,” he added.

Responding to the news, the Labour Party’s Social Protection spokesman Willie Penrose gave a cautious welcome, but said defining just who is a higher earner would be key to ensure the system is fair and equitable.

“There is a valid argument that people who have a higher income and have made the contributions should get a higher payment, even in the short run.

“There is nothing wrong with the principle as those people would have a higher level of commitments, but we will need to define what is the definition of a high earner,” said Mr Penrose.

Fianna Fáil’s Social Protection spokesman Willie O’Dea said the idea has merit but he said the flurry of announcements in recent days have to be backed up with actions.

“This is a system which is in place in most other EU countries, so I have no problem with it.

“But we have had a blizzard of announcements from Leo. It is time for the talking to stop and let’s see some action,” Mr O’Dea told the Irish Examiner.

Mr Varadkar has been criticised over the weekend by a number of his Cabinet colleagues for announcing plans to radically alter the social welfare system without getting their collective approval.

Seen as one of the main challengers to succeed Taoiseach Enda Kenny, Mr Varadkar denied his announcement on Thursday was the effective launch of his leadership bid. He described media speculation suggesting that as trivial gossip.

Separately, Mr Varadkar has said that the Government is “very concerned” at suggestions that vulture funds may be using tax avoidance methods in Ireland.

His comments come as it emerged that officials from the Department of Finance and the Revenue Commissioners are investigating so-called vulture funds who are alleged to be using a clause in Irish law to pay small amounts of tax here.

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