Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 157: To ask the Minister for Social and Family Affairs if his attention has been drawn to the fact that people whose earnings increase to €353 per week pay PRSI contributions of 4% which can lead to a situation where an employee with a gross weekly pay over €353 can have a lower net pay than a employee earning €352 or less per week; his views on whether this disincentive to people earning additional income is fair; if he has proposals to eliminate this anomaly; and if he will make a statement on the matter. [15784/08]

Martin Cullen (Waterford, Fianna Fail)
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The level of the weekly social insurance contribution that is payable is, for the most part, determined by both the level of reckonable earnings in that week and the appropriate PRSI rate. The PRSI exemption on low earnings has now been increased to €352 per week (up from €339 in 2007) — any earnings above this level are liable to an employee PRSI contribution rate of 4%. Above this threshold point contributors are entitled to a PRSI-Free Allowance of €127 per week that reduces the 'step-effect', whereby an employee with gross weekly pay over €352 could have lower net pay that an employee earning €352 or less per week, of the threshold.

Therefore, a person insured with an income up to €352 per week will have a nil liability whereas a person with an income of more than €352 per week will have a PRSI liability of 4% on the portion of that income above the €127 PRSI-Free Allowance. This tiered system enhances employment incentives for low-earning employees by ensuring that they do not experience financial difficulties from the payment of social insurance contributions. There are currently no plans to change the existing provisions.