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

As I was looking at the amendment, the same question crossed my mind. I thank the Deputy for offering such forbearance and an opportunity to me to change the budget, but I will explain why I am not in a position to accept his amendment.

In this Finance Bill I have provided for an increase of €150 in the earned income credit to bring it to a value of €1,500 per year. It is estimated that the credit will be of benefit to approximately 217,400 cases in 2020. In view of the particularly limited resources available to me in budget 2020, it was not possible to increase the earned income credit by €300 to €1,650 as proposed by the Deputy. Such an increase would cost €40 million in 2020, as compared to the €20 million first year cost of the €150 increase which was achievable within the resources available to me. It would also give a disproportionate benefit from the budget, if we were to go down the route proposed by the Deputy, to the self-employed as compared to all other individuals, including PAYE workers, pensioners and welfare recipients.

I accept that differences remain in the taxation of employees and the self-employed. However, it is the case that some of these differences are to the benefit of the self-employed. For instance, the self-employed continue to benefit from a broader expenses deduction regime than employees. There are also significant timing benefits in the payment of tax liabilities which are available to the self-assessed but not 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 as no equivalent of the employee PRSI contribution is payable.

I am aware of the commitment to increase the earned income credit to €1,650 by 2018. However, the different constraints I had to consider and also the fact that I had made so few other personal tax changes in the budget meant that bringing the credit to €1,500 was as far as resources would allow me to go and also as far as I felt it was appropriate to go in the context of other changes I was not in a position to make.