Joan Burton (Dublin West, Labour)
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87. To ask the Minister for Finance the status of the proposed medium term tax strategy document; if it will be presented to the Houses of the Oireachtas by July 2017; and if he will make a statement on the matter. [34097/16]

Joan Burton (Dublin West, Labour)
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92. To ask the Minister for Finance his plans for reforming the current tax arrangements for the self employed; and if he will make a statement on the matter. [34102/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 87 and 92 together.

I understand following clarification with the Deputy's office, that the Deputy's first question relates to plans for future reforms of the income tax system, including USC, and to request an update on the income tax commitments in the Programme for a Partnership Government.

Budget 2017 is the third step in a long-term process of unwinding the USC. It is my intention to continue the process of reducing the USC in future Budgets, and the Deputy will be aware that this is not a measure that I have considered in isolation, but as part of a wider medium-term income tax reform plan. 

Further to a commitment in the Programme for Government, my Department published, in July this year, a detailed overview of the policy considerations relevant to this reform, including the necessity to maintain the breadth of our income tax base, and retain appropriate levels of taxation for high earners.

The purpose of this Income Tax Reform Plan was to inform all members of the Oireachtas of the issues and options which will underpin future income tax reform, and it is my hope that all members of the Oireachtas will engage constructively in debating options for future reform in this area. In this regard the scope for change will be dependent on the level of available fiscal resources.

In relation to the commitments in the Programme for Government, the Deputy will be aware that there is a commitment in the Programme for a Partnership Government to increase the Earned Income Credit (EIC) to €1,650, and the Budget 2017 increase of €400 to the existing €550 credit introduced last year is a significant step in this direction. This is available to self-employed individuals who have an active trade or profession, and who do not have access to the PAYE credit. This will be a significant benefit to small business-owners right across the country including small retailers, publicans, farmers and tradesmen. The Programme for Government also committed to introduce a PRSI scheme for the self-employed, and the Deputy will be aware that my colleague Minister Varadkar has announced a number of enhancements to the social protection benefits available to self-employed individuals.

I accept that differences remain between the taxation of employees and the self-employed. However it must also be acknowledged that some of these differences are to the benefit of the self-employed. For instance, there are significant timing benefits, depending on the accounting period used by the taxpayer, which are available to the self-assessed but which are not available to PAYE workers. The self-employed also continue to benefit from a broader expense deduction regime than that available to employees. 

The Deputy will be aware that the taxation of the self-employed is considered in some detail in the Income Tax Reform Plan, and the issues outlined therein will be borne in mind when deciding future reform of the income tax system as it relates to the self-employed.

With regard to other income tax commitments in the Programme for a Partnership Government, these included a commitment to support parents who choose to stay at home and care for their children, through an increase in the Home Carer Credit. In Budget 2017, I have provided for a €100 increase in the Home Carer Credit, bringing it to a value of €1,100.

Finally, the Programme also committed to explore mechanisms through which SMEs can reward key employees with share options in a tax-efficient manner. My Department held a public consultation on his subject earlier this year to which over 30 submissions were received and considered by my officials. In Budget 2017 I announced my intention to introduce a new, SME-focussed, share-based incentive scheme, to be introduced in Budget 2018. Such an incentive will require the approval of the European Commission and my officials will commence engagement with the Commission to ensure that the incentive will comply with State Aid rules in advance of the next Budget.