BUSINESS GROUP ISME has come out strongly against proposals to increase PRSI for the self-employed, labelling the idea “utter madness at a time of hardship”.

The proposal to up the contribution from 4 per cent to 5.5 per cent is contained in a report published today by the Advisory Group on Tax and Social Welfare. It’s aimed at providing additional benefits in the event of a person suffering a long-term sickness or injury.

Social Protection Minister Joan Burton said the recommendations of the Group would be taken on board and considered by Government:

My colleagues in Government and I will now carefully reflect on the findings of the Advisory Group on this issue and will further consider the recommendations contained in the report taking into account future developments in terms of the budgetary and fiscal situation as well as other work under way.

However, the proposal is coming in for major criticism from business groups, including ISME, which represents small and medium-sized enterprises. CEO Mark Fielding called it an example of discrimination against entrepreneurs:

Any mandatory increase in taxation on the self-employed at this stage will delay and in many cases kill business proposals, which would create jobs in the economy.

The criticism was echoed by other business groups, with the Small Firms Association saying that any additional taxes would “push already struggling owner managers out of business and fuel the unemployment crisis”.

Ian Talbot of Chambers Ireland said there was “no justification” for the move, adding:

Any increase should be entirely voluntary and ‘opt in’ in nature, especially given that income protection plans can be bought privately

Under the current system, all self-employed people with an annual income of over €5,000 pay a Class S PRSI rate of 4 per cent, subject to a minimum annual contribution of €500.

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