Cowen shies away from PRSI reform despite vow

DESPITE months of rumblings and his pre-election promise, Finance Minister Brian Cowen yesterday balked at the prospect of reforming the PRSI system.

Commentators flagged it as one area to generate extra revenue by targeting high-income earners while reducing the public insurance demands for the less well off.

Recent reports from his department suggested he agreed with this logic.

Instead, he made minimal changes at both ends of the income spectrum which will have less impact than the announcements he made 12 months ago.

From the new year, people will begin paying PRSI when their weekly income rises above €352 — €13 higher than this year.

However, there is still a ceiling on PRSI payments which means every cent earned above €50,700 will be exempt from social insurance.

This raises the ceiling by €1,900 — less than the €2,200 last year.

Before the election he promised fundamental reforms in this area and said he would abolish the ceiling on PRSI payments. This would mean all money earned above €352 a week would be liable for PRSI.

The extra money generated from high-income earners was to cover the costs of halving the PRSI rate to 2% to help poorer workers.

It featured at Fianna Fáil’s 2006 Árd Fheis and was promised by the Green Party to fund the looming pension deficit.

Yesterday, Mr Cowen never even mentioned the prospect of reform.