Credit aims to end ‘unfair’ treatment of self-employed

FINE Gael set out to woo the self-employed yesterday, promising eventual parity with PAYE workers in terms of a tax credit.

Admitting the treatment of the self-employed was unfair, Michael Noonan offered an initial tax credit of €550 a year, with the pledge of more to come.

Áine Collins, Fine Gael TD for Cork North West, said the new self-employed tax credit ‘marks a welcome start along the road to the equalisation of income tax credits.’

She insisted it began to address the poor treatment of self-employed people.

The Earned Income Credit will provide a credit to the value of €550 to small retailers, publicans, farmers and tradesmen around the country, and not just start-up whizzkids.

Fine Gael backbenchers recently prepared the ground with a campaign called ‘Standing up for Small Business,’ featuring a survey of the sector and special meetings around the country.

Whether encouraged by the leadership or not, the pay-off to the sector, which makes an annual self-assessment tax payment each autumn, came yesterday in Mr Noonan’s speech.

He said small and medium enterprises were the lifeblood of the economy and were critical to the national economic wellbeing, accounting for 68 per cent of all employment, meaning some 730,000 jobs.

‘All of these SMEs are being run by entrepreneurs. We need to encourage new entrepreneurs and to support existing ones,’ Mr Noonan said, claiming that there has been an anomaly in the structure of income taxation.

A PAYE employee takes home a greater proportion of their salary than a small business owner or entrepreneur on the same gross income, he pointed out. ‘To start addressing this disparity I am introducing a tax credit to the value of €550. It will be available to those who do not have access to the PAYE credit.’

He added: ‘I see this measure as a first step and further steps will be taken in future Budgets, as resources permit.’ The Irish Daily Mail understands the ultimate ambition is to equalise the tax credits, even though PAYE workers have no control over their income declarations. Mr Noonan also awarded the self-employed some plums on Capital Gains Tax.

Other measures in Budget 2016 to benefit small business owners include the retention of the 9 per cent Vat rate for the hospitality sector and a reduction in costs for retailers to accept card payments.

This will save retailers €36million a year in fees, the Department of Finance estimates.