Kieran O'Donnell (Limerick East, Fine Gael)

The Minister referred to consistency between the PAYE system and the self-employed. There are two elements to this. A person who is a PAYE worker received a tax credit of €1,830, which is the same amount as the personal tax credit which a person who is self-employed does not get, which does not detract from a person who enters a PAYE job; the employer and not the employee takes the risk. If a person establishes himself or herself as self-employed, he or she is taking a huge risk. The Minister is missing the essence of the amendment. He referred to the cost to the taxpayer. The overall cost to the taxpayer of a person who in unemployed is €20,000 per year, a fact which is recognised and accepted.

I know of clients who set up limited companies when they could not afford to do so. They should set up a limited company if they are paying tax, which they normally pay at the marginal rate. People will be forced to establish limited companies in order to avail of the relief. Such companies will make a loss. The people concerned will be forced to take a salary in order to pay for general living expenses to look after themselves and their families. It is fine if a limited company is making profits and there is a PAYE return to the Exchequer.

I am worried people will set up limited companies and by doing so will threaten the viability of their companies. Why not allow people to set up as a sole trader in the initial period, if that is the correct route, and introduce a reduced form of the relief for limited companies? We need to provide some incentive to encourage people to set upon as self employed. The Minister is missing the essence of the point. The majority of people who are self-employed establish themselves as sole traders.

If they speak to any professional, they are advised to set up as a sole trader initially. They will be advised that if they establish a limited company they will face the difficulty of being the director of such a company. If the company becomes insolvent such people face major legal consequences. There are filing requirements and auditors fees. The Minister could allow the provision to be granted for one or two years. There should be some incentive to encourage people to set up as self-employed and get people off the dole queues.

This measure will encourage people to set up as self-employed by way of a limited company. If we studied the issue in a year's time, we would find many people have not become self-employed because they found the consequences of setting up a limited company are prohibitive in the short term. Every person who leaves the live register is saving the taxpayer €20,000. The Minister has overlooked that point; he might address it.

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