Dáil Éireann Debate, Thursday - 10 October 2013
9. Deputy Timmy Dooley asked the Minister for Jobs, Enterprise and Innovation the impact on job creation and entrepreneurship of the mandatory PRSI increase on the self-employed recently advocated by the advisory group on tax and social welfare; and if he will make a statement on the matter. [42718/13]
View answerThe Terms of Reference of the Advisory Group on Tax and Social Welfare provide for the group to “examine and report on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable”.
The Group did not undertake an analysis of the wider social costs and benefits such as impact on job creation and entrepreneurship. The Report is a valuable contribution to the consideration of social protection for persons who are self-employed. It estimates that cover for Jobseekers Benefit would require a 1% increase in the self-employed contribution to be cost neutral, and cover for Invalidity Pension would require a 1.5% increase in contribution. It also showed that among those self-employed who do apply for the means-tested Jobseekers Assistance, the approval rate is high at 85% though it recognised that it is difficult to quantify the extent to which needs are being addressed. It pointed to a number of features of the system that may make it more difficult for self-employed persons to access entitlements in this area, ranging from lack of awareness to individual features of the means test. The Group also recommended compulsory cover for Invalidity Pension but was not persuaded of the extension of Jobseekers Benefit.
In the present climate, Government must be careful of any measures that increase the costs of establishing and operating a business.
On the positive side, entrepreneurs would be provided with an additional ‘safety net’. However, it is relevant that the responses received to the public consultation undertaken by the Advisory Group did not identify a lack of entitlement to the Invalidity Pension as a concern. The Group’s proposals for simplification of the methodology for assessing means for the self-employed are welcome.
However, in accordance with the Groups Terms of Reference, the group did not undertake a cost-benefit analysis regarding the economic merits of extending social insurance cover to the self-employed, and these require further consideration.
