Ruairi Quinn (Dublin South East, Labour)
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Question 136: To ask the Minister for Social and Family Affairs when the promise to cut the main PRSI rate from 4% to 2% and the self-employed rate from 3% to 2% will be implemented; and if he will make a statement on the matter. [20719/07]

Jan O'Sullivan (Limerick East, Labour)
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Question 141: To ask the Minister for Social and Family Affairs the estimated cost to the social insurance fund over the next five years, in terms of revenue foregone, of the planned cut in the main PRSI rate from 4% to 2% and the self-employed rate from 3% to 2%; and if he will make a statement on the matter. [20720/07]

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 610: To ask the Minister for Social and Family Affairs the amount in view of the fact that it has been indicated in the Programme for Government that the shortfall in revenue in the Social Insurance Fund resulting from the proposed cuts in PRSI rates will be made up by the Exchequer, that it is projected that the Exchequer will have to make up. [17254/07]

Martin Cullen (Waterford, Fianna Fail)
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I propose to take Questions Nos. 136, 141 and 610 together.

Approximately 76 per cent of workers pay PRSI Class A and Class H at the rate of 4 per cent; their employers pay 10.75%. A further 11 per cent of workers pay social insurance contributions at the Class S rate. These contributions which are subject to various thresholds, allowances and ceilings, accrue entitlement to a range of benefits and pensions under various social insurance schemes. The current employee PRSI ceiling stands at €48,800 per annum.

It is estimated that a decrease in the employee PRSI rate from 4% to 2% would reduce Social Insurance Fund income by some €720 million in a full year. The abolition of the PRSI ceiling for ordinary employees would yield some €295 million in additional contribution income. A decrease in the self-employed PRSI rate (Class S) from 3% to 2% is estimated to cost approximately €220 million in a full year. Of course if introduced as a package, the combination of measures would give rise to a compound effect.

The effect over a five year period would be dependant on the sequencing of any changes to the PRSI rates. Clearly however, any reductions to PRSI rates would have the effect of reducing corresponding contributions to the Social Insurance Fund.

Traditionally social insurance spending has been funded on a tripartite basis with contributions coming from the exchequer, employers and employees. It should be noted that legislation provides that the Exchequer is the residual financier of the Fund and that Exchequer contributions to cover any shortfall in contributions were the norm for over forty years. No Exchequer contribution has been required since 1996 as the fund has been in surplus on foot of contributions from employers and workers. Any future shortfall in the cost of benefits paid would in the normal way be addressed by exchequer subvention.

Changes in PRSI contribution rates are considered in a budgetary context and any such changes would be announced in future budgets.