Wednesday 1 June 2016

Noonan to cut extra USC for self-employed

Pre-election Budget will also help working parents

Published 06/09/2015 | 02:30

Minister: Planning several tax cuts and incentives in Budget 2016
Minister: Planning several tax cuts and incentives in Budget 2016

Finance Minister Michael Noonan will reduce the difference between the Universal Social Charge paid by entrepreneurs and PAYE workers in the next Budget, as well as lowering the overall rate of USC paid by everyone, the Sunday Independent understands.

Under the current regime, self-employed people pay 3pc more in USC on earnings over €100,000 than PAYE employees earning the same money.

It has long been a bone of contention for business owners and the self-employed, who argue that the extra USC penalises and suppresses entrepreneurship. Now the Minister looks likely to reduce the disparity in the next Budget.

And the USC as a whole, for everyone, is expected to be cut by as much as 2pc.

The Government expects to have an extra €1.5bn to distribute in Budget 2016 thanks to strong tax receipts - though a bumper August tax take revealed last week indicates that it may have even more to return to the taxpaying public.

Alongside reducing the disparity between the self-employed and PAYE workers, and reducing USC overall, some €300m will be spent on already-agreed wage hikes for civil servants. Money will also be allocated for more free creche time for toddlers, to help mothers trying to return to the workforce.

A creche place for a small child costs up to €1,150 a month, meaning parents need to earn up to €30,000 a year just to fund the cost of childcare for two children.

A recent survey found that 84pc of stay-at-home mothers wanted to work in some capacity but felt trapped by childcare costs.

The Government intends for the Early Childcare Scheme to be extended and improved, it is understood. The scheme already provides a free year of care for children of pre-school age.

Tax breaks and other incentives to entice ex-pat workers in finance and engineering back to Ireland are also being considered.

Major skills shortages in fields like accounting and engineering have forced the Government to examine how to entice workers skilled in these fields, who left during the recession, to move back to this country.

An incentive package aimed at enticing back Irish nurses working in the UK was recently introduced, the first of its kind.

The tax-free HSE relocation package offers flights and relocation expenses worth €1,500. The HSE is also offering to pay nurses' registration fee of €100, fund postgraduate education and give incremental salary credit for work experience outside of Ireland.

The incentives targeting engineering and finance would be aimed at the private sector and thus achieved in a different way, probably through sector-specific tax cuts.

"Extending that concept to other fields would send out a very powerful message that Ireland wants these people back," said a source close to the Department.

Sunday Indo Business

Read More

Promoted articles

Editors Choice

Also in Business