Raise PRSI rate paid by self-employed, tax expert group calls for

A huge increase in the PRSI rate paid by the self-employed is recommended by a group of experts set up to advise the government on tax and benefit systems.

The self-employed pay rate in Associated Social Insurance (PRSI) should increase over time to 11.05 percent from the current 4 percent, the Taxation and Welfare Commission has proposed.

The move would affect up to 331,000 people who are self-employed in the state, including farmers.

Employees pay 4 percent, but their employers pay an additional 11.05 percent on their behalf.

This means that a PAYE worker is paid a total of 15.05 percent in PRSI.

But only 4 percent are paid by the self-employed, despite receiving similar Social Security benefits.

The commission, whose report is due to be published tomorrow, argues that there has been a huge expansion in self-employment benefits in recent years Irish Independent understands.

However, this was not accompanied by an increase in the PRSI they paid.

The recommendation for a huge increase in PRSI for the self-employed is in line with a recommendation from the Pensions Commission earlier this year.

Individuals who pay the PRSI or Class S 4 percent self-employed rate include farmers, artisans, freelancers, certain business executives, individuals working alone or in partnerships, and individuals with income from investments, rentals, or alimony payments.

Until recently, the self-employed received largely nothing if their business ran into difficulties. But in recent years there have been radical changes that have expanded the benefits they can now claim.

The self-employed are now entitled to jobseeker’s benefits, the state contributory pension and maternity and paternity benefits.

The range of benefits now also includes the treatment allowance, which makes a financial contribution to dental, optometrist and ear doctor services, as well as widows’ and widowers’ pensions.

However, the self-employed are still not covered by short-term payments, including sickness and disability payments.

Despite the increase in benefits, the PRSI set of four for the self-employed has not changed.

A survey commissioned by then Social Protection Minister Leo Varadkar in 2019 found that a majority of the self-employed would be willing to pay more to receive the same PRSI benefits as employees.

The Commission has now ruled that the benefits for the self-employed are broadly similar to those for employees, meaning that the self-employed have to pay a higher PRSI rate.

The commission, chaired by Niamh Moloney, professor of law at the London School of Economics, argues that the self-employed need social protection.

She does not want a situation where people choose not to become entrepreneurs if failure of their business means they are left without benefit protection.

Until recently, self-employed people who were unemployed, fell ill or whose business went bankrupt were not eligible for government benefits.

It is understood that the Commission intends to increase the PRSI rate for the self-employed from 4 per cent to 11.05 per cent over a number of years, with increases being phased in.

The self-employed representatives are likely to bitterly reject the proposal, arguing that if they perform well they will be taxed more heavily than employees.

This is because there is an additional USC fee of 3 percent for any self-employed income over €100,000, regardless of age.

The commission’s report is due to be published tomorrow by Finance Minister Paschal Donohoe, and this proposal will prove to be one of the more controversial.

The Commission is not asking for any of its recommendations to be included in this month’s budget

She wants her recommendations to be implemented over a period of 10 to 15 years.

The general thrust of the report’s 100 recommendations relates to property and wealth taxes, but also to the taxation of environmentally harmful goods and not to income taxes.

Another focus is on removing subsidies for carbon-generating goods and services.

Commissioners have been looking at ways to meet the rising costs associated with an aging population, particularly pensions and health care costs.

https://www.independent.ie/news/hike-prsi-rate-paid-by-self-employed-workers-urges-tax-expert-group-41983794.html Raise PRSI rate paid by self-employed, tax expert group calls for

Fry Electronics Team

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