HIGH-EARNING self-employed people earning more than €200,000 per annum will see their net pay increase in 2011 as a result of the Budget, the Department of Finance has accepted.
Those who will earn €500,000 will pay almost €9,000 less tax, while those earning €1 million will pay €24,000 less.
The department said the increase was part of a move to unify the tax system and ensure both self-employed and PAYE employees were paying the same tax rate of 52 per cent.
The change means a high-earning individual will pay 52 per cent tax rather than 55 per cent tax for all earnings over €200,000. Those individuals will pay 3 per cent less tax.
Fine Gael finance spokesman Michael Noonan said yesterday that the “top-of-the-scale tribunal lawyers earning €1 million would be €24,000 better off than they were in 2010”.
Mr Noonan is one of several Opposition figures who have criticised the change. He said yesterday that the rich would get even richer as a result of the Budget.
“Fianna Fáil are looking after their friends again. They should put the Galway tent back up in front of Government Buildings, and the Greens should be employed as doormen,” he said.
He predicted that the Government would hastily bring in amendments in the Finance Bill to close what he said was a loophole created by the Budget.
Sinn Féin’s finance spokesman Pearse Doherty also criticised the measure saying millionaires would have their take-home pay increased.
“This is a budget for the wealthy. This is a budget for the financiers and the propertied rich. The Minister spoke of burden sharing, but what is actually happening is burden off-loading.”
“Someone with an income of €500,000 will get a 4 per cent increase in their net income. At the same time someone on PAYE and earning €25,000 will be 4.3 per cent worse off,” he said.
Labour Party TD Róisín Shortall said the universal social charge was a “working-poor tax” which significantly shifted the tax burden away from high earners and on to those on lower pay.
“It substantially raises taxes on all workers with an annual salary of less than €26,000,” she said.
A spokesman at the department said a self-employed person would still have smaller net pay, after paying more tax and other deductions, than their PAYE counterpart.
While accepting the gap had closed, he pointed out that “the self-employed income earner on €500,000 is still €1,914 worse off than their PAYE counterpart.”
The key point, he said, was that self-employed earners employ themselves in order to become PAYE taxpayers to avail of tax reliefs.
The spokesman said that up until the Budget the number of self-employed taxpayers claiming such taxable income was nominal, as most availed of tax reliefs (which are reduced or eliminated in 2011), or made themselves PAYE employees to avail of the lower tax rates.
“High earners will see significant increases in their taxation levels, especially when the pension relief restrictions come into effect,” the finance spokesman said.
