Fine Gael plans to extend PRSI to incomes over €13,000

Fine Gael is to propose the extension of pay related social insurance (PRSI) to incomes over €13,000 to help fund additional parental leave during a child's first year and a widening of dental benefits.

The party’s election manifesto will commit to a shake-up of the social insurance system and an extension of benefits, paid for in part for by lifting PRSI exemptions on lower earners.

The pledge was unveiled as senior Labour figures including Tánaiste Joan Burton warned against a single-party Fine Gael government.

Ms Burton said Fine Gael in government on its own would be driven to protect the wealthiest in society and would neglect key social issues.

“I would imagine that a government that did not have the Labour Party in it – that was 100 per cent Fine Gael – I think that that would be imbalanced.

“It would lack balance in terms of the emphasis on the social recovery as much as the economic recovery.

“I think it would lack balance in terms of emphasising that we want people to have work with decent pay and conditions, as opposed to simply looking after people at the top end of the income scale who are very well off,” she said.

Abolition

Under the new Fine Gael plans people on incomes over €13,000 would start to pay PRSI, rather than the current level of €18,000.

Lower earners would still pay less overall due to the planned abolition of the USC, but some gains would be clawed back.

The proposal being drafted would allow for a lower rate than the standard 4 per cent to apply to the low income earners.

In return Fine Gael will commit to a new PRSI entitlement for parental leave, in addition to existing maternity leave entitlements and the new paternity leave due next September.

Under the programme either parent would be able to take additional leave in the first year of the child’s life.

This would be phased in, with two weeks’ leave granted in 2017 and an additional two weeks each year up to 2020, bringing the total to eight.

The manifesto will also include the expansion of dental treatment benefit to include the cost of some routine treatments in addition to the annual oral examination.

Motivation

Fine Gael will seek to sell the proposal as part of its programme to “make work pay,” also involving a reduction in overall tax levels and a proposed plan to help lower earners.

Part of the motivation is to avoid narrowing the tax base too much as the universal social charge is phased out.

A party source said: “The big difference compared with the USC is that extra PRSI contributions will fund new entitlements for working people.”

Taoiseach Enda Kenny has this weekend promised taxes would be cut to the level of the United States and Britain.

However, Opposition parties Sinn Féin and Fianna Fáil labelled the move as "auction politics" and "gimmickry designed to mislead voters in the run-up to the election".

Fianna Fáil spokesman on finance Michael McGrath said the Taoiseach was making the same mistakes Labour made in 2011.

“The Taoiseach appears to have taken a leaf straight out of the Labour party’s election strategy from 2011 when they steadily ramped up their election promises despite knowing that what they were saying was undeliverable in practice,” he said.

Sinn Féin's finance spokesman Pearse Doherty also criticised the plan.

“Enda Kenny’s tax proposals are auction politics at its worst. They would destroy what is left of our public services and put our economy in danger once again,” he said.