PRSI plan may hit middle incomes

MIDDLE-INCOME families could end up paying €500 more a year in PRSI under budgetary proposals being discussed by senior officials in the Department of Finance.

The Programme for Government contains a promise to abolish the ceiling of €48,000 on PRSI and to halve the rate from 4% to 2%. The effect of this is that those on lower incomes will benefit, while those on higher incomes will pay proportionately more.

However, there are soundings coming from the department that in more straitened times, the cap may be raised from €48,000 with no corresponding reduction in the rates.

The effect of raising the ceiling to €60,000 would mean middle and higher earners will pay about €500 more per year in PRSI.

Yesterday, The Sunday Times reported Finance Minister Brian Cowen may be prepared to remove the cap completely in order to fund an expansive pension and social welfare package in next month’s budget.