Michelle Mulherin (Mayo, Fine Gael)
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20. To ask the Minister for Finance if he will review the tax code which provides for the singling out of the self-employed for payment of a higher rate of universal social charge and its potential to adversely affect business investment, growth and potentially job creation and retention in small and medium enterprises; and if he will make a statement on the matter. [4610/15]

Michael Noonan (Limerick City, Fine Gael)
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First of all, I would point out to the Deputy that the USC surcharge only impacts on a small proportion of the high earning self-employed. In 2012, the latest year for which definitive figures are available, just over 11,000 taxpayers paid the 3% USC surcharge. This represents approximately 6% of taxpayers whose primary income is not subject to PAYE, or half of one per cent of all income earners.

The introduction of USC in 2011 was accompanied by a series of other reform measures designed to simplify the tax system and widen the tax base. As part of these the PRSI ceiling on income over €75,000 was removed for all employees. This meant that those employees on incomes in excess of €75,000 would now be liable to an additional 4% charge on that portion of their income. At the same time the PRSI rates for self-assessed income earners was increased from 3% to 4%.

At that time, a 3% USC surcharge, in addition to the 7% rate on that portion of self-assessed income over €100,000, was introduced. The alternative would have seen self-assessed high income earners benefit when compared to their PAYE counterparts from the tax package introduced in 2011. On the basis of fairness, this could not have been countenanced at the time.

It was necessary to maintain the 3% in Budget 2015 in order to ensure that the self-assessed on high incomes did not benefit disproportionately from the Income Tax package and that the maximum benefit is capped for all taxpayers at €14 per week.

To allow large increases for the self-assessed on high incomes would be difficult to justify, or indeed would not be fiscally prudent, at a time when the country is only beginning to emerge from a prolonged economic downturn.

Far from being anti-enterprise, a fair, efficient and competitive income tax system is essential for economic growth and job creation. The Statement of Priorities issued by the Government in July 2014 included a commitment for an income tax reform plan  to be delivered over a number of budgets, to reduce the 52% marginal tax rate on low and middle-income earners, including the self-employed, in a manner that maintains the highly progressive nature of the Irish tax system.

It is important to note that the self-assesed were subject to a marginal tax rate of 55% on incomes in excess of €100,000 in 2014, and they will continue to face the same rate on such income in 2015.