The self-employed are getting a raw deal from the tax system which is suffocating the creation of new jobs, the Small Firms Association has said.
The head of the Association has also warned more broadband investment is needed to help start-up businesses get off the ground.
"Tax reform is key to unlocking job creation, investment and growth," said SFA Chairman, AJ Noonan.
"The SFA has long advocated reform of the Irish tax system to make it more attractive and rewarding, to establish and operate, a business in Ireland.
“The first step is to end the discriminatory treatment of proprietary directors and the self-employed in the tax system.
"At the moment they are subject to a USC surcharge and don’t receive any PAYE tax credit, even where they pay tax on a PAYE basis.
"The upshot is that they pay more tax than they would as an employee on the same salary – so they are being punished for taking the risk of starting their own business and creating jobs,” he added.
Speaking at the National Economic Dialogue conference in Dublin this afternoon, he said capital gains tax is another area that must be urgently addressed by the Government in the upcoming budget.
"We need a no-nonsense 20pc CGT rate, with an attractive, functioning Entrepreneur’s Relief, similar to the 10pc rate for entrepreneurs in the UK."
He warned these changes regarding tax must be coupled with "targeted investment" in infrastructure and broadband to ensure all parts of Ireland is business friendly.
“Entrepreneurs and the small business sector, given the right economic conditions, will generate the growth needed to create jobs, overcome our debt burden, and deliver the prosperity and quality of life that this country can legitimately aspire to."
"Small business can lead the way in helping Ireland to continue to recover faster and stronger than others – but the tax environment must be brought into line with the Government’s rhetoric on entrepreneurship," said Mr Noonan.