John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Question 294: To ask the Minister for Social and Family Affairs the revenue to be raised by a one point increase in PRSI contributions. [18164/05]

Séamus Brennan (Dublin South, Fianna Fail)
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As part of the annual Estimates and budgetary cycles, my Department estimates the level of PRSI contribution revenue which can be expected in the coming year and also the impact of any possible changes in the key parameters within the PRSI system, such as contribution rates, earnings thresholds for different payment rates, the employee PRSI free allowance and the ceiling on employees contributions. Estimates for the 2006 fiscal year will be undertaken later this year when Department of Finance projections for employment and earnings changes are undertaken.

Pre-budget 2005 Estimates provided an opportunity to estimate the possible impact of rates changes on social insurance contribution revenue in the 2005 fiscal year. Estimates were based on a random sample of class A employments from our main client database in respect of fiscal year 2002 and then uprated to take account of changes in the labour force and in earnings since then. It was estimated that a one percentage point increase in the higher employer PRSI contribution rate, leaving all other parameters unchanged, would have yielded in the region of €360 million over and above an unchanged rates scenario. An increase in the lower employer PRSI rate would have yielded around €57 million in a full year if all other parameters were left unchanged. An increase of one percentage point in the main, class A, contribution rate for employees would have yielded in the region of €262 million in a full financial year.

The Estimates shown are those for a full financial year and the precise impact in any budgetary year would depend on the date of implementation.