Plan to hike up PRSI for self employed

A Government-sponsored report into social welfare insurance for the self-employed is expected to recommend a hike in PRSI payments in return for welfare protection for long-term injuries or sickness.

Today, the third report of the Advisory Group on Tax and Social Welfare, set up by Social Protection Minister Joan Burton, will recommend a PRSI increase from 4% to 5.5% for the country’s 300,000 self-employed workers.

If the Labour minister seeks to implement the tax hike, it will set her on a collision course with her Fine Gael coalition partners, who are strongly opposed to any income tax increases which they believe are “anti-jobs”.

Fine Gael has consistently said that employers need cash to pay wages and create jobs.

However, the report is expected to “bust the myth” that the self-employed cannot access unemployment supports, according to government sources.

“It busts a myth in the area of unemployment supports,” a government source said last night, adding “there is a perception the self-employed cannot access unemployment supports from the Department of Social Protection but the report will say this is not the case”.

The report by the so-called Mangan group will outline how 85% of self-employed people who claimed the means-tested Job Seekers’ Allowance during a three-year period from 2009-2011, actually received the payment.

This is in contrast to the widely held perception that those who own or run their own businesses don’t receive social welfare payments when out of work.

Because the self-employed pay a lower PRSI rate of 4%, they are not eligible to claim the non-means tested Jobseekers’ Benefit of €188 per week.

However, the advisory group is expected to recommend the 1.5 percentage point PRSI tax increase to fund the extension of social insurance for the self-employed in cases related to long term sickness or injuries.

This will provide cover for people who are permanently incapable of work because of a long-term illness through the Invalidity Pension and the Partial Capacity Benefit.

Last night, a Government spokesperson said the Coalition was aware of the report’s content.

“This is a report. It has recommendations and as with any recommendation, the Government will examine them.”

Government sources said it expected the proposals to be discussed over the coming weeks, but did not anticipate any Government decision before the forthcoming budget on Oct 15.

The advisory group, chaired by barrister Ita Mangan, was set up by Ms Burton in 2011 to meet a commitment in the Programme for Government.

It has already issued two reports, the most noteworthy of which recommended the introduction of a two tier child benefit system. It said there should be a universal child benefit payment with a top-up payment for those who need it most.