The Irish Congress of Trade Unions is to tell the Select Committee on Budgetary Oversight on Wednesday that while it supports many of the recommendations made by the Commission on Taxation and Welfare aimed at broadening the State’s tax base, it believes that the proposed extension of PRSI to the low paid and those over 66 would be unjustified.
Congress representatives, Laura Bambrick and Ger Gibbons, are to tell the committee that while the report contains many progressive policy recommendations there are also proposals “to extend, a raft of very generous and costly tax expenditures and low rates for enterprises and high-earning individuals”.
In their opening statement to the committee they describe some of these tax breaks as “highly regressive, reduce transparency, and conflict with the principles of tax justice and solidarity”.
The Committee is considering specific parts of the report by the commission which last year made a total of 116 recommendations with regard to the State’s taxation and welfare systems. The Irish Fiscal Advisory Council estimated that if implemented in their entirety, the measures would raise some €15 billion annually in additional revenue for the Government.
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The commission recommended that to promote equity and sustainability, preferential income tax or universal social charge treatment based on age or personal circumstances should be phased out.
“As far as possible, and with limited exceptions, income tax and PRSI charges should be based on income only and different types of income should be treated equally,” it said.
“ICTU supports the principle of broadening the PRSI base to safeguard the future sustainability of the Social Insurance Fund and improve the adequacy of income supports, and largely agrees with the range of recommendations put forward to achieve this,” Ms Bambrick, who is the organisation’s Head of Social Policy & Employment Affairs, and Ms Gibbons, who is its Social Policy and Legislative Officer, will tell the committee’s members.
“However, we have major reservations about the recommendation to make low wage workers liable for PRSI. Employees earning below €352 a week are currently exempt.
“ICTU also has grave concerns with the recommendation to make people aged over 66 liable for PRSI. Ending the PRSI exemption on all income other than social welfare payments will unfairly and disproportionally impact certain groups of older people. For example, many pre-95 civil servants, who have no entitlement to the State pension, rely on a public sector pension that is of the same or less than the value of the State pension. But under this recommendation they would be liable for PRSI on their modest pension.”
They will argue that the proposed changed would, if implemented, also result in some pensioners being doubled taxed on their occupational pension scheme and would undermine the Government’s policy of promoting work beyond retirement age.
