The Small Firms Association (SFA) is seeking a rebate from the Government for the costs incurred by companies in collecting tax for the Exchequer.

The SFA says firms currently act as "unpaid agents" for the State and incur significant costs in doing so.

They collected £12,801 million on behalf of the Revenue Commissioners last year including £4,926 million in PAYE, £3,461 million in VAT, £1,944 million in PRSI and £2,470 million in excise duties. This represented 84 per cent of the total sum of £15,207 million collected in 1997.

The SFA estimates that the cost to business of collecting this money amounted to £153 million in 1997. It says a disproportionate element of the cost of collecting tax falls on small business.

"Small companies increasingly find the burden of tax collection a major impediment and cost factor which detracts from the onerous responsibility of running a small business," the association says.

SFA director Mr Brendan Butler says the costs involved include staff time in relation to processing, the cost of purchasing and operating computerised systems and the cost of buying in professional help. He also says there are opportunity costs associated with lost time which should be dedicated to the core business. Mr Butler is calling on the Government to commission an immediate study to establish conclusively the costs incurred in collecting state revenues. The Government should commit itself to rebating to business the costs associated with revenue collection, he says.

The SFA also suggests that firms employing less than 50 people which meet all their deadlines for tax filing should receive "a merit payment" in the order of a 2.5 per cent rebate of tax collected in each financial year.