Hike PRSI to boost State spending, trade union report suggests

Kevin Callinan, general secretary of Fórsa, said: 'This report digs into how we should, and how we can, achieve an expanded state and work towards a best-of-class social wage supported by a competitive environmentally-robust economy founded on secure and well-paid work.'

PRSI should be hiked to meet underspending on pensions, childcare, education, and renewable energy, according to a new report commissioned by Ireland's largest trade union, Fórsa.

The report produced by Think Tank for Action on Social Change (Tasc) examines the role of the Irish State post-pandemic, and recommends key areas where State spending should be increased, and how the gap in spending could be bridged.

It reports that at 40% of national income, Ireland’s State spending is the eighth lowest of the 27 EU countries, and below the EU average of 46.5%.

The State spends almost €3,500 less per person each year on public services and infrastructure compared to similar European countries — €17bn less in 2019 alone.

Ireland spends 28% less on pensions and 12% less on family and child welfare when compared to high-income EU countries, and just two-thirds of what its peer group spends on basic research.

Other areas of underspend include early years’ provision including childcare, higher education, waste management, and environmental protection.

The report calls for the retirement age to be kept at 66, and for eldercare supports spending to increase by €900m in the coming years.

It also recommends a €1.5bn increase in funding for the early years sector to bring it up to 1% of national income as recommended by Unicef, and a trebling of public funding for renewable energy research and development.

The report adds that State spending on higher education should be returned to 2000s levels of about 1% of national income, with 0.1% of this spending allocated to research.

'The Irish State Post-Pandemic' report says the single biggest cause of the shortfall in State revenue compared to high-income European countries is low social insurance contributions, particularly on the employer side. It calls for employers’ and self-employed PRSI to be increased to at least 1% of national income.

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It also calls for the phasing out of capital gains tax (CGT) relief, the updating of property values used to calculate local property tax, and the phasing out of fossil fuel subsidies.

Fórsa general secretary Kevin Callinan said the report “takes up the challenge” of fundamental reform of State finances to bring Ireland in line with “the rest and the best” of Western Europe in terms of spending on public services and infrastructure.

“This report digs into how we should, and how we can, achieve an expanded state and work towards a best-of-class social wage supported by a competitive environmentally-robust economy founded on secure and well-paid work,” he said.