Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

In the Finance Bill, I have provided for an increase of €200 in the earned income credit to bring it up to a value of €1,150 per year. The €200 increase provides a significant benefit to small business owners across the country, including small retailers, publicans, farmers and tradesmen. It is estimated that the credit will be of benefit to approximately 151,600 individuals and business interests in 2018. In view of the limited resources available to me in budget 2018 and in light of the competing demands for amendments to the tax system, it is not possible to increase the earned income credit by €450 to €1,400 as proposed by Deputy Pearse Doherty. Such an increase would cost over €37 million in 2018 as compared to the €17 million first-year cost of the €200 increase, which was achievable within the resources available to me. It would have given a disproportionate benefit from the budget to the self-employed as compared to all other individuals, including PAYE workers, pensioners and welfare recipients.

I accept that differences remain between 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 example, the self-employed continue to benefit from a broader expense deduction regime than that available to employees and there are significant timing benefits regarding the payment of tax liabilities which are available to the self-assessed but which are not available to PAYE workers, depending on the accounting period used by the taxpayer. Deputies will also be aware that the overall contribution to the Social Insurance Fund by the self-employed is significantly less than that of employees because, as Deputy Burton pointed out earlier, no equivalent to the employer PRSI contribution is payable. However, Deputies will be aware that A Programme for a Partnership Government contains a commitment to increase the earned income credit to €1,650. The budget 2018 increase of €200 is a significant further step in that direction and it is my intention to make further progress on increasing this credit in budget 2019, subject to the available resources.

For the reasons outlined, I do not propose to accept the amendment.