Fianna Fáil has said social welfare rates should not be cut to meet the shortfalls in PRSI contributions.
It comes as differences re-emerge between Labour and Fine Gael on the issue.
Comments by junior finance minister Brian Hayes that “a general reduction in rates of social welfare might well be the way to go,” have been described as “bizarre” by Willie O’Dea, Fianna Fáil’s spokesman on social protection. He said Mr Hayes’s comments show “how quickly he and his colleagues have become disconnected with reality”. He said Fianna Fáil would “robustly resist” any efforts to cut welfare rates.
“More and more people are in danger of falling below the poverty line — the solution should not be to reduce the social welfare rate further.”
Mr Hayes said there was a significant deficit in the social insurance fund and the problem has to be fixed, but added: “It does not necessarily follow that a rise in taxes is the solution.”
He said the focus should instead be on reducing spending and cutting welfare might be the best option.
Social Protection Minister Joan Burton favours plugging the shortfall by increasing PRSI contributions. The Labour Party has pledged not to cut welfare, but Fine Gael is opposed to any further taxes on income and resisted efforts to raise PRSI ahead of the last budget.
The social insurance fund is used for payments of state pensions, invalidity benefits, sickness, and unemployment benefit and is funded by PRSI and the exchequer.
An actuarial report which will be presented to the Government shortly is expected to highlight a €2.2bn shortfall in the fund, which will have to be topped up by the exchequer.
Brian Keegan of the Chartered Accountants Ireland said the charge was taken off all income so any increase would “hurt significantly”.
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