Fianna Fáil TD for Cavan-Monaghan Brendan Smith says his party is looking at a range of options to help entrepreneurs and self-employed people. As part of its submission to the Department of Finance’s public consultation on Tax and Entrepreneurship, Fianna Fáil has committed to tackling the income tax anomaly facing self-employed people as well as implementing a new 15% capital gains tax rate for entrepreneurs.
Speaking at the Fianna Fáil Parliamentary Party Think-In in Dublin, Deputy Smith said, “Setting up a business can be a daunting experience. There is no shortage of talented people with great ideas but there are a huge number of obstacles which entrepreneurs and start-ups are faced with, not least a complicated regulatory and tax system.
“People who are taking the leap and starting their own business need to be encouraged and supported, not penalised by rigid legislation. We have a duty to ensure a fairer tax system for self-employed people and entrepreneurs. Under the current system, self-employed people are at a major disadvantage because, while they receive the personal tax credit of €1,650, they cannot claim the PAYE tax credit – also worth €1,650 per annum. This has a particularly stark impact for lower income levels. For example, a self-employed single person on an income of €17,500 pays almost 6 times more tax and PRSI as an employee on the same income.
“This disparity could be addressed through an earned income tax credit. This proposal was suggested by the Commission on Taxation and Fianna Fáil would support its roll out over a three year period with an initial tax credit €500. We’d also like to see the 3% surcharge on high income self-employed people should be phased out so as to equalise the application of the USC to PAYE and self-employed people.
“The party is also committed to improving the capital gains tax system for entrepreneurs to ease the excessive restrictions that are currently in place. This would create a more general relief from CGT for entrepreneurial investors regardless of whether they invest in a new business. No one proposal will solve every issue facing self-employed people and entrepreneurs but a range of co-ordinated reforms to ease the huge burdens placed on the sector will go a long way to encouraging more people to set up their own businesses and supporting those who have already undertaken the task”.