Self-employed to get extra sick pay but would pay more in tax
Varadkar wants European-style ‘social insurance’ rolled out
Additional sick pay for the self-employed is on the cards ahead of this year's Budget, the Irish Independent has learned.
Social Protection Minister Leo Varadkar is looking at introducing extra benefits for tens of thousands of self-employed people in a bid to bridge the gap with PAYE workers.
But the Fine Gael politician believes taxpayers should pay more by way of social insurance in order to gain access to additional benefits.
Research commissioned by Mr Varadkar found more than four-out-of-five self-employed people stated long-term illness as the number one benefit that needs to be extended.
This was followed by the benefits available for business people when they become ill for short periods of time or unemployment.
But significantly, the study found the vast majority of those surveyed would be willing to pay a higher rate of PRSI if it meant they would receive additional benefits in return.
The current headline rate of PRSI is 4pc for the self-employed. The survey of 3,200 respondents found that 88pc would be willing to pay a higher rate in return for at least one additional social insurance benefit.
Mr Varadkar last night confirmed that the findings of the report will be considered in the context of Budget 2018.
He said the self-employed will be entitled to claim a number of new benefits, including the invalidity pension, by the end of the year as a result of a decision taken as part of last year's Budget. These are on top of new benefits in the area of dental and eye treatment.
But Mr Varadkar confirmed that he wants to see additional benefits rolled out in the next Budget, expected to be in October.
"We are already tackling one of the top demands for illness cover by giving self-employed people access to the Invalidity Pension later this year, without a means test," Mr Varadkar said.
"For the first time they will have access to the safety-net of State income supports if they become permanently unable to work through illness or disability. There will be no increase in PRSI for this.
"The results of this survey will guide new policy developments in the short term, including Budget 2018, and the longer term."
Mr Varadkar has already indicated that reform of the tax system will be a key plank of his campaign to become taoiseach.
Central to his plan will be an overhaul of PRSI and USC so as to ensure more benefits are given to taxpayers.
He wants to instead introduce a system of "social insurance", which is used in many other European countries.
Social insurance money paid by workers would be "ring-fenced" to provide additional benefits such as medical expenses.
Mr Varadkar has already committed to raising the point of entry to the higher rate of tax from its current threshold of €33,800. And the Dublin West TD says the marginal tax rate will be brought below 50pc for all workers.
Mr Varadkar's main rival in the leadership battle, Simon Coveney, has yet to detail his own tax proposals.
Mr Coveney has enlisted the services of former Fine Gael adviser Ciarán Conlon, who is spearheading policy formation.
Fine Gael sources expect that Taoiseach Enda Kenny will formally announce the process for electing a new leader after he returns from Canada next week.
There is now a growing consensus with ministers and TDs that the contest to succeed Mr Kenny will be held within the next six to eight weeks, and even as early as the June bank holiday weekend.