Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I am providing for an increase of €400 in the earned income credit bringing it up to a value of €950. The €400 increase gives a benefit of more than €7 a week to those eligible for the credit, in addition to the benefits they receive from other elements of the budget package such as the USC reductions. In view of the limited resources available in budget 2017 and all of the competing demands for amendments to the tax system, it was not possible to increase the earned income credit by €1,100 to €1,650 as proposed by Deputy Stephen S. Donnelly, or by €550 to €1,100 as proposed by Deputy Pearse Doherty. Such increases would have given a more disproportionate benefit to the self-employed as a result of the budget when compared to all other individuals, including PAYE workers, pensioners and welfare recipients An increase of €1,100 would have resulted in a single self-employed individual earning €25,000 gaining more than €23 per week as a result of the budget package, while a PAYE employee on the same income would only gain €2 per week. Similarly, a €550 increase would have provided an additional benefit of more than €10 per week for the self-employed. The increase of €400 contained in the section allows for an additional benefit of almost €7.70 per week, over and above the benefits received by employees in the budget. This was an appropriate balance in view of the resources available in the budget.

I accept that significant differences remain in the taxation of employees and the self-employed. However, it must be acknowledged that some of the differences are to the benefit of the self-employed. For instance, there are significant timing benefits, depending on the accounting period used by the taxpayer, which are available to those who are self-assessed but not to PAYE workers. The self-employed also continue to benefit from a broader expense deduction regime than that available to employees. Deputies will be aware that there is a commitment in A Programme for a Partnership Government to increase the earned income credit to €1,650. The budget 2017 increase of €400 in the existing €550 credit introduced last year is a significant step in this direction. For the reasons outlined, I do not propose to accept the amendments.