Friday, September 06 14:15:52
A proposal to increase Pay Related Social Insurance (PSRI) for the self-employed is being considered by the Government, which, according to employers, would cost thousands of jobs.
In a report published today, the Advisory Group on Tax and Social Welfare recommended increasing the standard rate of PSRI paid by self-employed people to cover those who were permanently incapable of work as a result of long-term sickness or injury.
Currently, the 324,700 self-employed people working in Ireland are liable for PRSI at the Class S rate, which entitles them to access long-term benefits such as the contributory State pension.
However, they are not entitled long-term illness and disability benefits, similar to those afforded to employees, who pay at the higher rate Class A rate. To fund the change, the advisory group recommends increasing the current rate of 4 per cent to 5.5 per cent, a move which is likely to prove controversial with groups representing the self-employed.
But business group ISME today called on the Taoiseach to "bring some semblance of reality" to the proposal for a mandatory increase of 37.5pc in PRSI contributions of the self-employed.
The Association proposed that the self-employed and proprietary company directors be allowed choose an optional higher PRSI contribution for themselves to guarantee equal status under the social welfare code.
"The current system in Ireland is completely unfair, based on antiquated, bureaucratic and cumbersome legislation, which penalises the self-employed and denies them their social welfare entitlements. The failure to provide supports to entrepreneurs not only sends out the wrong message in promoting an enterprise culture but also disregards and disrespects the significant contribution of these individuals to the Economy," ISME said.
According to ISME Chief Executive, Mark Fielding, "Any mandatory increase in taxation on the self-employed at this stage will delay and in many cases kill business proposals, which would create jobs in the economy. ISME has highlighted the problems with the system for many years and has proposed a solution, which is current in many EU countries and takes account of the trends towards new forms of self-employment".
"However, the excuse trotted out by the mandarins is that the 'Opt-in' proposal would be too cumbersome and unwieldy, despite its usage across the EU. So, rather than think innovatively, the best the combined brain-power of the department could come up with was a mandatory increase of 37.5pc, at a time of recession." "For too long the State has treated self-employed entrepreneurs as second class citizens and ignored the significant taxes and jobs generated by these individuals. The reform of the system is a perfect opportunity to introduce 'Opt-in' facilities for the job creating self-employed sector and cease the discrimination embedded within the current system," he concluded.