Mr. Ian Martin:

The SFA represents approximately 7,500 companies and has seven affiliated organisations. Ireland is trying to encourage more people to create jobs, take risks, set up businesses and become self-employed, but there are many restrictions on people who become self-employed. For some time, we have been arguing for a voluntary additional PRSI contribution to be paid by the self-employed. We are not asserting that all such people want to pay a full PRSI rate, but they should be allowed to retain the benefits of PRSI to encourage them to start up businesses. A self-employed person who pays the S class stamp only qualifies for the widow's or widower's pension. He or she gets a guardian's payment, the State pension eventually and a restricted maternity benefit. An ordinary employee can get maternity benefit straight away, whereas a self-employed person must be self-employed for at least 12 months. This is discriminatory, particularly given the fact that we are trying to encourage more women into the workplace and to set up businesses. The self-employed also get the adoptive benefit and the bereavement grant. This system needs to change.

Recently, I was speaking with someone in the UK. Were I an owner-manager of a business in the UK, I would effectively pay the same social welfare stamp as my employees. If my business closed down, I would also qualify for unemployment benefit. It would be means tested eventually, but I would initially get the same as my former employees. Self-employed people in the UK pay approximately 11%.

The tax rates paid by the self-employed are also at issue. We all discuss the reduction of rates, but the self-employed pay higher rates of tax and PRSI than anyone else. We are meant to be the people generating jobs. We are taking risks and putting our necks on the line but we are getting nothing in return. That Ireland is a high-tax country has been recognised and discussed for some time. The person taking the risk must be rewarded. Self-employed and employed people should be treated the same. We live in the same country and use the same services, so why are we discriminated against? I can understand why it was the case years ago, but most of my colleagues and I pay ourselves on the same basis as we pay our employees, for example, monthly. We do not pay our taxes 12 months in arrears unless, for example, the tax relates to investment rental income, but that is true of PAYE workers as well. Why does the system discriminate against us, particularly in terms of voluntary PRSI?

Our members believe that a voluntary system is the right approach. I have been suggesting it for two or three years. A compulsory system would turn people off. Instead, people should be allowed to opt in.

For example, if I am an A1 contributor and I decide tomorrow to set up my business, I then become an S1 contributor and I lose all the benefits I have paid in the past 30 years. That is wrong. One should be able to retain those benefits in some manner. They could be restricted for a five year period or whatever to enable the person to take the risk because we know many businesses fail within the first year. All the statistics are available. We have to recognise those failures but encourage such people to get up off the ground and start again. If somebody who was running a business failed it is unlikely they will go to work for somebody else; they will try to start again. That is why we would like to have a voluntary system in place.