The Small Firms Association (SFA) has said plans to impose PRSI and health levies on benefit in kind are unworkable and should be scrapped.
In its pre-Budget submission, the SFA said taxing benefit in kind contradicted Government fiscal policy and would be unjust in light of the generous tax breaks afforded to horse breeders, artists, musicians and property developers.
The move should at least be postponed, as its introduction from next year will place a needless burden on workers when net job growth in the private sector remains weak.
The SFA also reiterated the call by its sister organisation, IBEC, for benchmarking pay rises for the public sector to be stalled pending productivity gains.
Mr Brendan Butler, SFA director, said: "Benchmarking increases must only be paid where verifiable improvements in efficiency, effectiveness and economy have been achieved against agreed measurement and performance criteria."
Local authorities should be discouraged from passing on the cost of benchmarking by raising "stealth taxes" such as refuse charges, Mr Butler said.
The association also cautioned against increasing income tax, warning low taxes are essential in the current climate of sluggish economic activity, diminished competitiveness and poor employment growth.
With expectations of recovery growing, especially in the United States, it is essential that the forthcoming Budget puts the Republic in a position to benefit from any turnaround in the world economy, said Mr Butler.
"The ability to control Government spending and inflation lies at the heart of sound economic management.
"The... need is to provide a climate where indigenous confidence and investment will increase and where consumer spending will maintain a steady growth. This requires measures aimed at ensuring the retention of a non-punitive tax policy, a low inflation environment and the delivery of public services based on quality, necessity and value for money."
