Bosses seek tax break to match staff

COMPANY directors are pressing for tax reform, claiming that its costs them an extra E3,000 a year to take home the same pay as their employees.

In a submission to Brian Cowen, the finance minister, company bosses claim the tax system discriminates unfairly against them. Those owning more than 15% of the shares in their companies are liable for PAYE, but cannot claim the special tax credit available to other PAYE workers. This is worth E1,760 a year.

"A person who quits a job and sets up a company is out of pocket to the tune of E1,760 each year," the submission states. "A director needs to earn approximately E3,000 in additional income to achieve the same take-home pay as any other employee." The submission was prepared by the Institute of Directors in Ireland and the Institute of Chartered Accountants in Ireland.

They claim that directors are treated unfairly if they miss the filing deadlines for tax returns. This results in an automatic 10% surcharge on all taxes, including those that directors have paid on time through the PAYE system.

"No other worker is surcharged on their employment income under the same circumstances," according to the submission. It argues that, unlike other taxpayers, directors are unfairly charged PRSI on non-employment income such as rent from property. If a teacher and a director both earn E30,000 a year in rent, the director pays PRSI but the teacher does not.

"The very fact of being a proprietary director costs that director E1,500 more per annum," according to the submission. It argues that directors are automatically branded as fat cats, even when their businesses are small.

"Many of the highest-earning individuals in Ireland are not proprietary directors," it states. "This submission is aimed at alleviating tax discrimination faced by, for example, the owner-director of an engineering firm in Mayo or a manufacturing business in Carlow, people who work at the coal face of Irish business."

Meanwhile, in its budget submission Ibec, the employers' lobby group, has called for improved capital allowances for companies that purchase energy-efficient vehicles, the abolishment of 1% stamp duty on share transactions, and the halving of the 25% tax rate on dividends received from the foreign subsidiaries of Irish companies.