Workers and employers could face significant hikes in PRSI from 2023 under plans outlined in pre-budget papers drawn up for the Government.
With the social insurance fund badly depleted by Covid-linked payments, and facing long-term challenges related to demographic changes, the papers from the Tax Strategy Group outline options for raising more revenue.
The changes sketched out would see increases of 1.5 percentage points in most PRSI rates over a period of three years.
Under the proposals, the 4 per cent PRSI rate paid by most employees would increase to 4.5 per cent in 2023 and by a further half point in each of the following years, reaching 5.5 per cent in 2025. It would also kick in at lower earnings levels than present, about €13,000 annually compared with €18,300 now.
Self-employed people would see a major increase, to 12.55 per cent by 2028, the same rate that would be expected of employers, with those rates climbing in increments from next year.
Working from home
Separately, the pre-budget papers argue there is little justification for improving tax relief available to people working from home.
With as many as 95 per cent of remote workers looking to continue working away from the office in some form, the case for enhancing reliefs is weak from an economic point of view, the Tax Strategy Group argues, saying it could “further contribute to the transfer of the burden of employer-related costs from the employer to the State”.
Elsewhere, the papers note that the cost of a full tank of diesel will rise by almost €1.50 under previously planned increases in carbon tax, with a fill of petrol to be €1.28 more expensive.
The vehicle registration tax relief of up to €5,000 on electric vehicles is due to expire in December. This should be extended beyond the end of this year, the papers say, but it should apply only to cars priced less than €40,000.
