‘€80m lost a year to foregone tax’
The investigation, undertaken by the Department of Social Protection, began with a consultation with interested parties.
ICTU has estimated that around €80m a year has been lost to the exchequer from foregone tax and PRSI payments as a result of workers being wrongly classified as self-employed.
In total, the estimated loss since the practice began to grow in popularity a decade ago is believed to be in excess of €650m.
Many who opt to go self-employed are quite happy to do so, some eager to avail of some of the advantages. The self-employed pay their own tax, which opens up the possibility of availing of tax reliefs that are generally beyond the reach of PAYE workers, although many of these advantages have been tightened in recent years.
However, there are also a large cohort that are not given a choice in the matter. Congress estimates that upwards of 30,000 sole traders are operating in the construction sector alone, with precious little checks as to whether their status is legitimate.
A statement from the Department of Social Protection said the consultation closed last March and responses were received from groups representing employees, employers, professional bodies, and the Department of Jobs, Enterprise and Innovation, as well as individuals.
“These responses were fed into a draft report which is currently being discussed by the department along with the Department of Finance and the Revenue Commissioners, and which will be considered by relevant ministers in the near future.
“This draft looks at the broad issue of disguised employment, taking into account policy changes in Budget 2017 and how to tackle the loss to the exchequer.”
