ESRI: Removing tax cliff edges could improve work incentives  

Report suggests people may reduce working hours to keep their income below the point at which they pay PRSI and USC

The ESRI said it would be possible to create a new 0% tax band to address the issue where people will not be taxed up to a certain amount earned. 

Removing cliff edges from the tax and benefits system would improve work incentives during a time when Ireland’s labour market remains quite tight, a new report by the Economic and Social Research Institute (ESRI) has found.

Under the current taxing structure, both PRSI and USC have cliff edges where if a person earns under a certain amount they are exempt from paying the taxes.