Written answers

Friday, 16 December 2016

Department of Finance

Programme for Government Implementation

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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112. To ask the Minister for Finance if the programme for Government commitment (details supplied) will be implemented fully in 2017; and if not, the reason therefore. [40828/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am aware of this commitment in "A Programme for a Partnership Government" to increase the Small Benefit Exemption. I will not commit at this stage to a specific date but I can confirm that I will consider its implementation in the context of the Budget and Finance Bill cycle in 2017.

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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113. To ask the Minister for Finance the position regarding the programme for Government commitment to provide a supportive tax regime for entrepreneurs and the self-employed. [40830/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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A number of measures have already been introduced by the Government in respect of the Programme for Government commitment referred to by the Deputy.

The Budget 2017 income tax package included an increase in the Earned Income Credit from €550 to €950 per annum.  This is a significant step towards the Programme for Government commitment to increase the credit to €1,650 by 2018.  The Earned Income Credit is available to self-employed individuals who have an active trade or profession and who do not have access to the PAYE credit, and it is of significant benefit to small business-owners right across the country including small retailers, publicans, farmers and tradesmen.

The Programme also committed to explore mechanisms through which Small to Medium Enterprises can reward key employees with share options in a tax-efficient manner.  Employee participation in their company's ownership and profits has been shown to increase competitiveness and support employment and growth, and appropriately targeted incentives may assist SMEs in attracting and retaining key staff members.  My Department conducted a review of tax policy in this area in 2016, which included the holding of a public consultation to which over 30 submissions were received. Following this review, in Budget 2017 I announced my intention to introduce a new, SME-focused, share-based incentive scheme 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.

The Programme for Government also committed to introduce a PRSI scheme for the self-employed, and in Budget 2017 the Government announced the extension of access to Invalidity Pensions to the self-employed. Invalidity Pension is a pension payment for people who cannot work because of a long-term illness or disability. When someone develops a long-term illness it can cause serious financial repercussions. Gaining access to Invalidity Pension will provide the self-employed with a much stronger safety net to protect them in the event of injury or disablement. The self-employed will gain access to Invalidity Pension on the same basis as employees from December 2017.

Also announced in Budget 2017, is the extension of Treatment Benefits to the self-employed on the same basis as employees. The Treatment Benefit Scheme provides partial dental, optical and aural services to those who have made the required contributions.  This extension will come into effect from March 2017.  Treatment Benefit entitlements will be extended further from October 2017, providing additional dental and optical benefits.

In addition, jobseekers taking up self-employment will be able to access the Back to Work Enterprise Allowance after 9 months, down from 12 months. Minister Varadkar, the Minister for Social Protection, can provide further information in respect of the above initiatives if required.

Further to a commitment in the Programme for Government, my Department published, in July this year, an Income Tax Reform Plan containing a detailed overview of various 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 taxation of the self-employed is considered in some detail in this Income Tax Reform Plan, and the issues outlined therein will be borne in mind when considering future reform of the income tax system as it relates to the self-employed.

The purpose of the 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.

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