Patrick O'Donovan (Limerick, Fine Gael)
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To ask the Minister for Finance the names of the persons, trade or profession referred to by him during his budget speech on the removal of the blocked exemption from PRSI for income from a trade or profession; the reason these exemptions were in place up until now. [55895/12]

Michael Noonan (Limerick City, Fine Gael)
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The position is as I stated in my Budget day speech on 6 December 2012, that Minister Burton will bring forward legislation to change PRSI contributions as follows:

- Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from 1 January 2013.

- Unearned income for all employees will become subject to PRSI in 2014. This means that PRSI will be payable on all income generated from wealth such as rental income, investment income, dividends and interest on deposit and savings.

Prior to Budget 2013, modified contributors paid PRSI on earnings derived from their employment but did not pay PRSI on any other stream of income e.g. from a trade or profession, or on unearned income (dividends etc.). As a result of Budget 2013, modified contributors who have income from a trade or profession will now be subject to PRSI (at a rate of 4%) on the profits from the trade or profession and also on any unearned income that they may have. Modified contributors are generally permanent and pensionable civil and public servants recruited before 6 April 1995 for example registered doctors and dentists employed in the civil service recruited prior to 6 April 1995. Trade or profession relates to any trade or profession within the meaning of section 18 of the Taxes Consolidation Act 1997.

As the Deputy will be aware, modified rate contributors are entitled to a state funded occupational pension based on their civil/public sector employment. Such contributors have been exempt from PRSI on other streams of earned income and unearned income on the basis that payment of PRSI on such income could give rise to additional entitlement to social insurance pensions. With the abolition of this exemption, PRSI will be charged on the earned and unearned income of modified rate contributors but will not give rise to entitlement to social insurance benefits based on the payment of this PRSI contribution.