Fianna Fáil campaigned for election last May on a promise to cut PRSI rates which Ministers knew would be almost possible to deliver, Labour's spokeswoman on social and family affairs, Roisín Shortall, said last night.
She said the indications that the Government was now preparing to renege on its commitment to halve PRSI rates came as no surprise as the evidence was there before the election that such cuts were not feasible.
"Reports that the Government does not intend to take any action in the budget to honour the election commitment Fianna Fáil gave to reduce PRSI rates are not surprising given that we now know that, as far back as April, they were in possession of an actuarial report showing that current PRSI rates would not be sufficient to fund existing benefits over the coming years," she said.
Ms Shortall said that an actuarial assessment of the Social Insurance Fund by Mercers Pension Consultants, published last month, showed while current PRSI contributions were running slightly ahead of expenditure on payments, in just three years time a deficit would begin to emerge.
"However, the Mercer report is based on existing PRSI rates and current entitlements. It takes no account of the Government commitment to increase the pension to €300 per week or the promise to cut PRSI contributions for employees and the self-employed," she said.
Ms Shortall added that the cost of the promised cuts would be €645 million a year, while the full-year cost of increasing the pension would be €2.019 billion.
"Clearly, if both of these go ahead, the Social Insurance Fund would be plunged into insolvency and the Government would have to make up the shortfall from general taxation, which would almost certainly mean an increase in direct or indirect taxation. It now seems that, despite having received the report last April, Fianna Fáil persisted in campaigning on a promise that they realised would be almost impossible to deliver," she said.
