Self-employed ‘will pay for new benefits’
SELF-EMPLOYED workers are facing the prospect of a 1.5% increase in their PRSI payments if Leo Varadkar attempts to improve their terms and conditions in Budget 2017.
Since becoming Minister for Social Protection, Mr Varadkar has made a series of high-profile announcements about his plans to improve welfare provision for the self-employed, who do not enjoy the same ‘safety net’ as PAYE workers.
Those whose status would be improved include the nation’s councillors, who will constitute a critical voting bloc in the next Fine Gael election.
Currently the self-employed do not qualify for Carers Benefit or treatment benefits such as dental, optical and hearing aids or, most significantly of all, Jobseekers Benefit.
The minister, however, will face stiff resistance within the Department of Finance should he attempt to radically improve the lot of the self-employed without a corresponding PRSI increase.
A Department of Finance strategy document, the Income Tax Reform Plan, from July, starkly states that improvements in benefits for the self-employed should be financed by a compulsory increase in the 4% rate of PRSI the self-employed pay.
The document says that, when it comes to Budget 2017, ‘any extension of cover needs to have regard to the current favourable treatment the self-employed experience and the need to finance, through an increased rate of contribution, any additional benefits’.
The Income Tax Reform Plan refers to a 2013 departmental study, which said: ‘An extension of social insurance in this regard should be on a compulsory basis and that the rate of contribution should be increased by at least 1.5 percentage points.’ The report warns that a non-compulsory scheme could ‘undermine the social solidarity and contributory principles that underline the social insurance system’.