The decision to remove the PRSI income ceiling for the self-employed and proprietary directors will adversely affect those in this category earning more than £44,500 (€56,503).
It has been strongly criticised by the Institute of Chartered Accountants in Ireland (ICAI), which said the measure would erode the benefits of the other tax changes in the Budget.
The measure is expected to yield £21 million a year after other related changes are taken into account. Most of the additional revenue would come from those earning £100,000 a year or more, the Minister for Finance, Mr McCreevy, said.
The contribution rate for the self-employed and proprietary directors has been reduced from 5 per cent to 3 per cent. The PRSI-free allowance of £1,040 is being abolished and the minimum payment of £200 per annum is being reduced. At present, the PRSI ceiling for the category is £26,500.
A spokesman for the Small Firms' Association said savings from the lower contribution rate would apply to those earning up to £44,500. A person earning £100,000 would see their PRSI bill increase by £1,605.
Mr Kieran Ryan, spokesman for the ICAI, said the change would have a negative effect on professionals such as accountants, solicitors, architects and doctors who do not incorporate and do not benefit from lower corporation tax rates.
"The Minister has given no rationale for this change and why he has singled out this group for such negative treatment."
Mr Ryan said that for professionals employing a significant number of staff, the abolition of the employers' PRSI ceiling was an additional burden, "again without any commensurate benefit in corporation tax".
