Thursday, 7 March 2019

Ceisteanna (76)

Pearse Doherty

Ceist:

76. Deputy Pearse Doherty asked the Minister for Finance if he has examined the disparity between the tax wedge between a PAYE worker and a self-employed person following the near completion of equalisation of tax credits by which the tax wedge related to a PAYE worker earning €40,000 is €4,080 less than that of a self-employed person (details supplied); and if he will make a statement on the matter. [11336/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am aware of the difference between the total taxation that arises in relation to self-employed and PAYE workers and the fact that this difference is due largely to the impact of Employer PRSI. 

The example in the ESRI report referred to by the Deputy shows the amount of income tax, USC and PRSI associated with a self-employed person and a PAYE employee, both with annual income of €40,000. 

PAYE employees earning €40,000 pay Class A PRSI which consists of 4% Employee PRSI on all earnings and in addition their employer pays 10.95% Employer PRSI on all of the employee’s earnings. 

In comparison, a self-employed person earning €40,000 pays 4% Class S PRSI on all earnings only; there is no equivalent to the Employer PRSI contribution in Class S PRSI. That is where much of the disparity comes from in the example in the ESRI Report referred to by the Deputy.