John Halligan (Waterford, Independent)
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3. To ask the Minister for Social Protection the rationale behind taxing income gained through employment on Tús programmes (details supplied); and if she will make a statement on the matter. [17796/14]

John Halligan (Waterford, Independent)
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Will the Minister explain the rationale behind taxing income gain through the employment Tús programmes? I understand that income over €350 is taxed at 4%. I draw the Minister's attention to the details I have attached to my question.

I gave the Minister an example of a chap who was taxed €15.70 on his €20 which meant he received 22 cent per hour for the 19.5 hours he worked on the Tús scheme. Surely the Minister would consider that an exploitation of workers.

Joan Burton (Dublin West, Labour)
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The Deputy's examples relates to an individual who worked 19.5 hours per week on Tús from October 2012 to October 2013. I understand he has a spouse and partner and for most of the year three qualifying children but subsequently two qualifying children. I presume one child reached the age of 18 and became an adult. He would have been paid a standard social welfare allowance of €422.20 per week consisting of a jobseeker's allowance of €188.00, a qualified adult payment of €124.80 and €89.40 in respect of three qualifying dependent children. That is without considering that the individual would have probably been entitled to a fuel allowance of €20 a week for six months of the year, back to school clothing and footwear allowances for the children going back to school and in addition a medical card. The individual had €422.20 a week in total. As Deputy Halligan correctly said, PRSI is chargeable from €352 per week. Employees who are liable for class A PRSI contributions who have an income of up to €352 per week do not pay anything. The rate of PRSI paid on amounts earned over €352 per week is 4%. It is not income tax; it is a social insurance contribution. As part of our fundamental social insurance system, that applies to people in private and public occupations around the country. It is what people in any job contribute. In return, the participants who pay it acquire very valuable social welfare and pension rights. I cannot accept Deputy Halligan's contention that this individual was not being paid significant amounts of money in terms of his family circumstances. It is a benefit for such people to participate in a Tús scheme, which are hugely popular around the country. I was in Waterford recently where people wanted more Tús places.

John Halligan (Waterford, Independent)
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The Minister missed the essential point. I am not attacking the Tús schemes. I have contacted the Department of Social Protection on the issue and it has acknowledged that one can be taxed and PRSI can be taken from the €20. Essentially, a person on a Tús scheme is on a social welfare payment. The Minister is asking such a person to work 19.5 hours for €20.

Joan Burton (Dublin West, Labour)
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No. They are earning €422.

Michael Kitt (Galway East, Fianna Fail)
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The Minister should allow Deputy Halligan to conclude.

John Halligan (Waterford, Independent)
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Surely, common sense would make it clear that if we ask people to work on a Tús scheme - the Minister is correct that many people want to take up such schemes - we should leave them alone, irrespective of their social welfare income and allowances for dependent adults and children. The additional €20 paid on top of their social welfare income should be excluded from tax and PRSI. After all, the income is very low anyway for anyone on social welfare with children who gets an additional €20 on the Tús scheme. I did contact the Department of Social Protection and it has acknowledged that it is possible that once the additional €20 is paid through the Tús scheme on top of a moderate or very low income that one will be charged tax and PRSI. That is clear from the example I have given of the individual concerned.

Joan Burton (Dublin West, Labour)
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When someone moves onto a Tús scheme he or she works 19.5 hours a week for their social welfare payment. In this case the social welfare payment was €422 plus a variety of other supports. If someone was working in a private business in Waterford earning €422 plus a medical card, fuel allowance and back to school clothing and footwear allowances they are expected to contribute a relatively small amount of PRSI, which is significant.

In the long run, in terms of the social insurance system, the people who are on the lowest income benefit most because they qualify ultimately for a contributory pension when they retire. There is significant demand around the country for placements on the Tús programme. I hope the particular individual enjoyed and got value from the placement on Tús. The key issue is that for someone like the individual concerned who has been out of work for more than a year and in some cases out of work for many years, Tús is a significant help towards ultimately getting back to education in many cases or further training or employment.

John Halligan (Waterford, Independent)
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According to figures from the Department of Social Protection which I received during the week, men make up 74% of those who take up the Tús scheme and 65% of the total Tús cohort falls within the 25 to 49 age bracket. That age and gender profile would suggest that in a significant number of cases a Tús worker is also the main breadwinner in a family. That is the argument that is being made by many people on the Tús scheme to whom I have spoken in Waterford. The scheme is not the issue. Although I have difficulty with it but that is neither here nor there relative to the question I ask. The individual concerned has a family and is the main breadwinner. Surely someone on a social welfare payment who works 19.5 hours and is offered an additional €20 on top of his social welfare payment should not have to pay tax or PRSI. That is common sense. Otherwise, one is asking someone to work 19.5 hours for €20 for which one would take home 22 cent an hour.

Joan Burton (Dublin West, Labour)
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I am coming at the issue from a slightly different approach. A constituent of Deputy Halligan who has been unemployed for a long time, along with 7,500 people at any one time, essentially do a one-year community contribution because almost everyone who is on Tús is working and contributing something in his or her local community. That is one of the reasons the scheme is so popular. The individual is earning €422 in social welfare plus a medical card, a fuel allowance for six months of the year of €20 a week, and the back to school clothing and footwear allowance for his children going back to school. Because the individual in question is employed for 19.5 hours, a small amount of PRSI is paid on the total package, which will build up the individual's entitlements in terms of social protection and ultimately and importantly result in a State retirement pension. If he was working in a private job and earning that money he would be paying the same amount in PRSI. I will talk to the Minister for Finance because he sets the rate of PRSI. Deputy Halligan might even raise the matter with the Minister for Finance when he gets an opportunity. The Tús scheme is very successful. I hope the man enjoyed his participation on it.