The Donegal TD said the Government’s new rates of Employer’s PRSI will punish workers and create a new poverty trap.
He said: “The Government’s announcement to cut the lower rate of employers PRSI by 50% will provide a huge incentive for employers to drive down wages.
“The Government has decided to cut the lower rate of Employer’s PRSI from 8.5% to 4.25% for those earning a maximum of €356.
“While this will result in a saving for employers in relation to their employer’s PRSI it will also provide a massive incentive to drive down the wages of those currently earning above €356 and will act as an obstacle to anyone who could possibly earn more than that in the future.
“For example, an employer would make a total saving of €41 a week by reducing an employee’s wages by just €16 from €372 to €356 as he would save €25 on his Employer’s PRSI Bill on top of the €16 from his employee’s wages. This equates to a saving €2,132 per year per worker.
“Similarly, an employer would save a total of €61 a week by reducing an employee’s wages by just €34 from €390 to €356 as he would save €27 on his Employer’s PRSI Bill on top of the €34 from his employee’s wages. This equates to a saving of €3,172 per year per worker.
“The Government’s decision clearly provides an incentive for employers to employ people on or below the €356 figure and to reduce wages of those earning over that level.
“This proposal will create a new poverty trap and hit workers hard. It will have a negative effect on the economy as people will have less money to spend while the state will also bring in less from this charge.”
Under the new Employer’s PRSI proposals the Government will apply a PRSI Rate of 4.25% (50% reduction on the old 8.5%) on incomes up to €356 and somebody earning €356.01 and above will be subject to an employers’ PRSI rate of 10.75% on the full amount.
The margin between the new proposed rates will be 6.5% and the margin between the existing rates is 2.25%.Tags: