06 Sep 2013
GOVT MUST FIX DISCRIMINATION AGAINST SELF-EMPLOYED BEFORE IMPOSING ADDITIONAL TAXES – BRYANEconomics, Farm Business & Credit
IFA President John Bryan has said that any proposal for a mandatory increase to PRSI for the self-employed would place an unfair additional cost on self-employed workers and must be rejected.
Mr Bryan said, “Under the existing PRSI system, employees receive benefits that are not available to the self-employed, such as Jobseeker’s and Illness benefit. If there is to be an increase in the PRSI rate for the self-employed, this must be voluntary and accompanied by a proportionate increase in the range of benefits that are available to this group”.
He continued, “Any change to the PRSI system for the self-employed must involve a voluntary, opt-in system, which would provide the option for a self-employed worker to increase their level of PRSI contribution in order to qualify for these additional benefits. However, where a self-employed worker chooses not opt in to this system, their PRSI contribution must remain at the current rate of 4%”.
The income tax system already discriminates against the self-employed. Farmers and other self-employed taxpayers do not get the PAYE tax credit that is available to employees and others paid through the PAYE system. “This results in employees entering the income tax net at twice the income level of self-employed (€16,500 v €8,250) and paying substantially less tax as a result. The Government would want to fix this inequity before they impose any additional taxes or PRSI hikes on the self-employed,” Mr Bryan warned.
He continued, “As an example, for a single self-employed farmer, with taxable income of €20,000, their tax liability (including income tax, PRSI and the USC) is €3,870, or 19% of their income. By contrast, an employee with the same taxable income has a tax liability of €2,220, or 11% of their income”.
He concluded, “There will be a negative impact on output and employment if the self-employed sector is unfairly forced to take on the burden of increased income taxes and charges through further increases in PRSI. The Government must instead concentrate on supporting enterprise and growth in this sector”.