Fine Gael plans tax reform for self-employed if re-elected

Fine Gael’s manifesto for the general election will commit the party to completing tax equalisation for the self-employed by 2018 if returned to government, Taoiseach Enda Kenny has said.

A €550 tax credit for small business owners and entrepreneurs was introduced in the budget earlier this month, with Minister for Finance Michael Noonan saying it would start addressing the disparity between self-employed and PAYE workers.

Mr Kenny, speaking at a Fine Gael press conference in Dublin, said his party wanted to end the "unfair" tax treatment of self-employed workers in the coming years.

“I want to let you know that the Fine Gael programme for the next government, the Fine Gael manifesto, will commit to completing the equalisation of the income tax system for the self-employed by 2018, by which time the new tax credit will match the €1,650 PAYE tax credit,” he said.

“So our programme for the next election will include a specific commitment to deal with that equalisation by 2018.”

However, Irish Small and Medium Enterprises Association (Isme) chief executive Mark Fielding said self-employed businesspeople he represented had been hoping equalisation could be achieved by 2017.

“We hoped it might be a bit faster. We were hoping he would do it in two years. If the economy continues to go the way it’s going they might have been able to afford to bring it in a lot faster, to show how they rate entrepreneurs.

“But they’ve gone a third of the way with the €550 this year. Beggars can’t be choosers. We’ve waited since 1980, I think, for this.”

‘Drag on recovery’

Meanwhile, Mr Kenny said the rate of tax on work had become “a drag on our recovery”, adding that the State’s marginal tax rates on middle-income workers were “much higher” than in the UK and other countries to which Irish people had migrated.

He said the OECD had classified the Republic as a leader “for the wrong reasons”, as it has the highest number of jobless households of member countries.

Mr Kenny also criticised Fianna Fáil’s approach to tax policy, saying it had “now joined . . . with Sinn Féin and other far-left groups in believing that penal tax rates on middle-income families are necessary to deliver public services”.

Fianna Fáil’s spokesman on public expenditure Seán Fleming strongly rejected the criticism.

"What the Taoiseach said is nonsense. Fianna Fáil is and always has been a pro-jobs and pro-enterprise party and we believe in getting people back to work, whereas Fine Gael only believe in rewarding the high-income workers," he said.