Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank Senator Butler, in particular, but I also thank all Senators for providing this opportunity to discuss the treatment of self-employed citizens under social insurance and income tax systems. I am encouraged by the fact that so many Senators turned up on a very sunny evening to speak on this very important issue.

This is an issue with which I have been actively engaged since assuming responsibility for the Department of Social Protection. There are, as Senators have said, almost 350,000 self-employed people in the State. They are a diverse group and include farmers, fishermen, tradesmen, sole traders, small business owners, professionals, freelancers, barristers and consultants. Some work part-time, others work every hour of the day, including at weekends. Some have other employment, most do not. Some are very wealthy - they are among the wealthiest in society - others, as Senator Ó Céidigh pointed out, probably earn less than the minimum wage on an hourly basis.

Underpinning the new partnership Government, is the commitment to job creation through, among other actions, the provision of a supportive environment for enterprise and employment. The role of entrepreneurs and the self-employed, in particular, will be central to this ambition. The programme for Government focuses on improving the position of the self-employed and this is not restricted to their access to social insurance. It also recognises the need to bring about equality between the self-employed and PAYE employees by increasing the earned income tax credit available to match that available to employees. This will be phased in over a number of budgets. It started in budget 2016 with the introduction of a €550 tax credit for the self-employed. I know that Senator Devine said there had been a great deal of discussion about the issue. I think the previous Government showed cause by getting the ball rolling in the most recent budget.

Core to the provision of a more supportive environment for the self-employed is the commitment in the new programme to introduce an improved PRSI scheme for them. Compulsory social insurance for the self-employed was introduced in 1988. Currently, self-employed people earning €5,000 or more in a contribution year are liable for PRSI at the class S rate of 4%, subject to a minimum annual payment of €500. This gives the self-employed access to a number of benefits, including: State contributory pension when they retire without a means test; widow’s, widower’s or surviving civil partner’s contributory pension for the spouse or civil partner of a deceased self-employed contributor; maternity benefit - I will certainly look into the issue raised by Senator Colm Burke; adoptive benefit, if they adopt; and guardian’s contributory payment. All of these are on the same basis as employees. The self-employed will also gain access to the new paternity benefit being introduced on 1 September. Speaking to self-employed people during the general election campaign, it seems that many are not fully aware of their entitlements. I propose an information campaign to resolve the position in this regard.I am not ruling out an opt-out element, but we would have to consider how many would opt in. There would be no point in doing it if people would not opt in as we would achieve nothing. One could not set the opt-in percentage so low that it would not generate the money needed to pay the benefit in the first instance. Like any opt-in system, it would cost more than a compulsory one. If it was compulsory, one would socialise the cost and spread it across more people, meaning that everyone would pay less.

Self-employed persons do not have access to these benefits. If they become ill or unemployed, they may instead access social assistance payments by establishing eligibility to payments such as disability allowance and jobseeker's allowance. However, they must pass what is often an onerous means test. Access to means-tested jobseeker's benefit payments for the self-employed was examined in the third report of the former advisory group on tax and social welfare which was chaired by Ms Ita Mangan. The group found that the current system of means-tested jobseeker's allowance payments adequately provided cover for self-employed persons for the risks associated with unemployment. I do not agree with this finding. Senator Alice-Mary Higgins was right to point out that 80% of self-employed persons who applied for jobseeker's benefit received it on a means-tested basis, but how many did not apply at all because they knew that there was no point in applying as they would not receive it?