Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

When the figures first emerged, we were a bit puzzled by that. When we drilled down, however, we found that the shortfall related to USC rather than income tax. We reduced the take from USC in the budget and perhaps that had an additional impact beyond forecast, but I do not think so. PAYE was up by 6% year on year and PRSI was up 7%. There is a quirk in the USC and I have asked the Revenue to have a look at it. Deputy Calleary will remember that there was an argument that people were reluctant to go back to work in low-paid jobs because they would lose ancillary benefits. One of the ancillary benefits they were afraid of losing was the medical card. Some years ago, a change was made to the effect that if somebody had a medical card – personal or family - and went back to work, he or she could hold on to it for a period of three years. Many people going back to work, while they would be paying PRSI and income tax, would not be paying USC. That is one possible explanation. As well as that we are not absolutely sure how the HSE has been administering the system. The HSE may have been a little more generous than the policy parameters anticipated. Revenue is having a look and I will keep the Deputy informed.