PPF withdrawal threat by IBEC

IBEC has reiterated its threat to withdraw support from the Partnership for Prosperity and Fairness if the Minister for Finance does not reverse PRSI changes announced in the Budget. The employers' lobby group has given Mr McCreevy the ultimatum of either abandoning plans to abolish the ceiling on employers' PRSI or else substantially reducing the rate of PRSI paid by employers.

The organisation yesterday listed a number of other related measures that it would like to see implemented in the finance act. These include an increase in the ceiling for the lower rate of employers' PRSI from £280 per week to £300 per week. Increasing the ceiling for the 7.8 per cent rate would indirectly reduce employers' PRSI bills as less of their employee's salary would be subject to the higher employers' PRSI rate of 12 per cent.

Mr Brendan Butler, the head of social policy at IBEC said that the organisation will keep up its campaign until the finance bill is published next month. He added that the organisation's warning that it will walk away from the national wage agreement was still "live".

IBEC met the Taoiseach, Tanaiste and Minister for Finance on the issue before Christmas but has not had any subsequent discussions. None are scheduled. Mr Butler could not indicate at this stage if the pressure being applied by the group would pay off. According to IBEC the increases in PRSI represent an additional tax on employment and was poorly judged in the light of the difficult trading environment being experienced by many high-tech US multinationals. IBEC is also seeking a favourable capital gains tax treatment of share options, and a training fund to assist companies deal with the threat to their competitiveness of higher PRSI bills. Accelerated capital allowances for research and development as well as tax credits for R & D are also being sought.