FF PRSI proposals would cripple Social Insurance Fund!

[kerrynorth]

The FF PRSI proposals announced by Bertie would cripple the Social Insurance Fund if implemented. What he announced if reelected is that the pension would rise to E300/week and that PRSI employee and self-employed rates would fall 2 and 1% respectively (with the eleimation of the ceiling). This would lead to a present cost of around E2.2 billion if implemented in 2007 this would wipe out the projected surplus this year and put it into a E1.2 billion deficit. This would wipeout the SIF surplus in just over 2 years!

The SIF was projected to bring in E7.6billion in 2007 and spend E6.3billion prior to the budget or a E1.3billion surplus, however, the budget changes mean that this surplus will now probably mean the surplus this year would fall to maybe E0.8billion. Pensions are BY FAR the single biggest item in the SIF with an estimate adjusted for the budget of circa. E2.75billion. If you adjust these figures for FF's proposals then the pension costs would rise to circa E4billion at todays prices whereas revenue to fall to circa E6.8billion.

Of course what these figures do not take adequate account of is the greying and longer life spans of the population meaning that the figures for pension costs presented here are actually very conservative.

As far as I can see no one has tackled FF on this election promise or the figures behind it!

There can be only 2 implications if FF were to follow up on this proposal:

1. The SIF will be crippled in the medium term incurring significant decficits from year 2 onwards leading to the elimination of the present surplus and eventually leading to the Fund going into a permanent deficit; or
2. A counterbalancing increase in Employers PRSI which FF conveniently failed to announce last Saturday.

This is very much a case of FF using the benefits and entitlements built up by the population to pay for their reelection!

[QuizMaster]

Whatever about that, the cheek of him making a list of election promises like that after they have already been in government for 18 of the last 20 years.

He only barely stopped short of saying "Things will be much better if Fianna Fail ever get into power".

I know you should never underestimate the stupididy of the public, but I think FF have gone too far this time.

The wind of change is blowing.

Of course maybe they want to lose this election.

[revereie]

First, it took so long before the pension was increased to €200 that I doubt Bertie has promised that this increase to €300 would be immediately implemented - although I stand to be corrected on this.

Presently people stop paying PRSI at c€44,500 - this is the de-maxmius limit beyone whioch you don't pay PRSI; Bertie has proposed to include all those with higher incomes in the PRSI-net. I would be interested to see how your figs stack up when this is taken into account.

As regards the longer living population, across Western Europe there has been a gradual rowing-back of the retirement age - and we can expect to see that here too in Ireland - hence more people able to work for longer and contribute also.

[Maximus]

Thanks for the helpful beer-mat-calculations kerrynorth, I understand the Department of Finance gave them consideration too and found them totally sustainable in the current economic environment. Perhaps ye should compare notes and see who's making the mistake?

[kerrynorth]

Thanks for the helpful beer-mat-calculations kerrynorth, I understand the Department of Finance gave them consideration too and found them totally sustainable in the current economic environment. Perhaps ye should compare notes and see who's making the mistake?

That about says it all really!

I would love to see these calculations, I know this matter came up in the Tax Strategy Group discussions recently. Do these calculations take into account the greying longer living population that I suggested. Remember that even my calculations were based on current 2007 conditions, therefore, actual reality in 5 or 10 years time could be much worse!

[kerrynorth]

Thanks for the helpful beer-mat-calculations kerrynorth,

At least its a change from the back of an envelope!

[Libero]

Thanks for the helpful beer-mat-calculations kerrynorth, I understand the Department of Finance gave them consideration too and found them totally sustainable in the current economic environment. Perhaps ye should compare notes and see who's making the mistake?

You "understand"? Any chance of a link to any evidence whatsoever of the workings of the Department of Finance? Or are we to be dismissed by reference to how these sort of things are confidential and not for public scrutiny?

Also, "totally sustainable in the current economic environment". Anyone who thinks tax reciepts will continue accelerating at the same levels of recent years (even with the stimulative effect of rate reductions) shows quite a faith in Ireland's Proponomy* continuing to motor along.

(Proponomy = Property Economy)

[baldur0300]

Whatever about that, the cheek of him making a list of election promises like that after they have already been in government for 18 of the last 20 years.

He only barely stopped short of saying "Things will be much better if Fianna Fail ever get into power".

I know you should never underestimate the stupididy of the public, but I think FF have gone too far this time.

The wind of change is blowing.

Of course maybe they want to lose this election.

Oh I forgot. FF is supposed to take a dive in this election just to give the blueshirts a chance.

This is the future of the Irish State we are talking about, not some schoolyard football game where even the worst player gets a chance.

What exactly do you expect Bertie to do? Not to make election promises? Unlike FG, Fianna Fail know how to manage an economy. (When's the last time FG produced an alternative budget?) We have been managing the most successful economy in the world and doing a fine damn job of it.

[kerrynorth]

Thanks for the helpful beer-mat-calculations kerrynorth, I understand the Department of Finance gave them consideration too and found them totally sustainable in the current economic environment. Perhaps ye should compare notes and see who's making the mistake?

On Vincent Browne last night it was stated that FF apparantly admit that there PRSI proposals would push the SIF into a continuing deficit that would have to be paid for through tax revenue.

Looks like my figures were on the money after all Maximus!

[Maximus]

Thanks for the helpful beer-mat-calculations kerrynorth, I understand the Department of Finance gave them consideration too and found them totally sustainable in the current economic environment. Perhaps ye should compare notes and see who's making the mistake?

On Vincent Browne last night it was stated that FF apparantly admit that there PRSI proposals would push the SIF into a continuing deficit that would have to be paid for through tax revenue.

Looks like my figures were on the money after all Maximus!

That doesn't change the fact that the tax cuts have been costed by the Department of Finance and found to be totally sustainable given current economic forecasts. The SIF isn’t some sacred cow, it’s entirely reasonable for the government to introduce changes that will give low and middle-income families a break in a way that’s fiscally responsible and socially fair.

The combined effect of halving PRSI to 2%, reducing the lower rate to 18%, scrapping the PRSI ceiling and most importantly giving a commitment to index the tax bands is a very imaginative proposal that blows away Rabbitte’s short-sighted policy. One which actually promotes inequality and would hurt hard working families in the longer term!