Fine Gael TD Tom Hayes says that the ‘unfair premise’ in the tax system which leaves the self-employed playing €1760 more in income tax than PAYE workers on the same pay should be phased out.
Speaking ahead of the Budget, Deputy Hayes said that Finance Minister Brian Cowen needs to reduce the “unfair penalty” which affects 350,000 people who are “short-changed to the tune of €1760 each year in tax credits”.
Added Deputy Hayes: “It is utterly unreasonable that self-employed people such as electricians, IT contract workers, and all others who work for themselves pay a higher tax burden.
“These people contribute hugely to the economy and their entrepreneurship is a key factor in our recent economic success. They receive little enough support in terms paid holidays, sick pay, pension benefits, or job security, and are under pressure to make ends meet in a more difficult economic period.”
Deputy Hayes described the self-employed and small business community as “essential to our economy and to our society”, and that they wholly deserved such tax relief.
“Yet, we refuse to allow them the same level of tax credit as PAYE workers, despite their hard work and the risks they take each day to keep their businesses afloat,” he continued.
The Tipperary South TD’s call did, however, carry a cautionary element. “With the economy slowing down, it would be unwise to make this change immediately, but it is imperative that the Government begin to close the unfair gap and prioritise these self-employed people and contract workers,” he said.
“The right thing to do is to increase the standard and married tax credits for all taxpayers – not to widen the wedge by increasing the PAYE credit.
“Historically, the reason why different tax regimes operated for the self-employed and those on PAYE, was that self-employed had the ability to avoid paying tax, or could pay it later.
“The Revenue Commissioners have ensured very high levels of compliance and the self-employed are now compelled to pay tax on income which they have not yet received, and therefore this reason has been eliminated.”