That Seanad Éireann:
- commends the Minister for Social Protection for planning to close the gap between self-employed and PAYE workers;
- calls on the Minister to implement a new social welfare stamp for the self-employed;
- calls on the Minister to introduce the recommendations of the Mangan report;
- calls on the Minister to legislate in this regard and for all other related matters in the context of equality of conditions for self-employed and PAYE workers.
I welcome the Minister and commend him and his predecessors for working to close the gap between self-employed and PAYE workers by increasing the earned income tax credit from €550 to €1,650 for the self-employed and to match the PAYE credit by 2018. The motion before the House calls on the Minister for Social Protection to implement a new stamp for the self-employed and introduce the recommendations of the Mangan report. I speak as a person who suffered because of the economic crash. Like many others who were self-employed, I had been in business for over 24 years and my business suffered through no fault of my own. The economic crash destroyed many lives. It was shocking to see the devastation of and impact on families that had worked hard all their lives when, through no fault of their own, their businesses were gone.
I recall canvassing during the election campaign of 2011 in Kildalkey outside Trim. A gentleman brought me into the front room of his house which he used as his office for his business. He showed me the files of PRSI contributions he had paid for his workers and those for the VAT and tax he had paid to the State. When he needed help for his young family, there was no help available from the State, despite the fact that this man had contributed all his life. It was shocking to see the desperation in that man's eyes and the tears rolling down his face because he could not afford to put food on the table, never mind pay his mortgage. It was harrowing. This happened all over the country. I know personally of self-employed persons who went down a dark road but never came back - I am talking about suicide.
Ireland is the only country in industrialised Europe that does not have social protection for the self-employed. I realise there is no perfect fit to suit everyone when it comes to social protection for the self-employed, but we have to start somewhere. In England the system operates on profits. After a self-employed person pays himself or herself a wage and all the outlays, it kicks in. He or she is exempt for the first £7,000 in profit, but he or she gets an entitlement to social welfare payments. On profit amounts between £7,000 and £20,000 he or she pays £3.30 per week which entitles him or her to social protection payments. On higher profits over £20,000 the rate is 9%. That is only one example of how it is done in another country. Other jurisdictions operate on the basis of voluntary and mandatory contributions.
The Mangan report recommended that we introduce stamp at a rate of 5.5% that would automatically entitle a self-employed person to sick pay or disability pay for nine months. After that, the person would have to be assessed for a longer term payment. I am keen that we should introduce a new stamp - eventually rising to a rate of 5.5% - that would cover sick pay, disability pay and job loss.
To introduce such a stamp in this year's budget, we could start off at a rate of 4.5% and then, while seeing how the economy and other factors perform in the coming years, we could plan to increase it to 5.5%. While I am aware it must all be costed, if the rate of universal social charge, USC, decreases by a further 1% in this year's budget, we will never get a better chance to introduce the stamp. I have spoken to many small and medium-sized enterprises, SMEs, of various types in the past six years. I have brought groups before the Oireachtas social welfare committee to speak on this issue and everyone is in favour of some form of protection for the self-employed. While the single self-employed are 100% behind this new stamp, the larger organisation representing businesses is in favour of protection for its members, albeit on a voluntary basis. This cannot work on a voluntary basis but must be mandatory, as nothing works through social protection that is voluntary. While I also understand some self-employed persons have companies or bigger businesses than the single self-employed person, consideration can be given to capping the contributions in order that such persons pay no more or no less than a single self-employed person.
In fairness to the previous Minister, Deputy Joan Burton, she lowered the threshold levels during the crash of the Celtic tiger and 22,000 self-employed persons received social protection benefits. Essentially, such people were obliged to get a letter from their accountants and Revenue stating they had ceased trading. In certain cases, this was not possible because of financial restraints. The aforementioned 22,000 who received social welfare benefits had not been paying contributions for this facility and those who were obliged to pay for this were the PRSI workers. Why should PRSI workers be obliged to pay for the self-employed? Self-employed persons do not need charity; they wish to pay for their own contributions. Members are debating an issue today that should have been sorted out 30 years ago. My father had a small business in Kells and I remember the same issue, which has never been sorted out by whatever Government was in power and nothing has been done by previous Governments. Nearly one quarter of the workforce are self-employed and this figure is growing all the time. These people have no protection if they get sick, experience disability or lose their jobs. The Government asks such persons to start new businesses, create new jobs and give to society. It is now time for the Government to put in place a safety net for them in order that there will be a helping hand to get them back on their feet if something goes wrong.