Business lobby group Isme has called on the government to undertake a comprehensive tax reform package in the next budget.

In its pre-budget submission, Isme urged Finance Minister Paschal Donohue to include a 3pc USC solidarity levy on all PAYE workers who earn more than €100,000 a year.

The proposed reform would also include reducing capital gains tax (CGT) to 25%, which Isme says will raise an additional €500m per year.

“We believe our proposals on USC and CGT would bring in an additional €800m a year to the public purse,” said Neil McDonnell, chief executive of ISME.

Isme also suggested eliminating the PRSI transition zone for the lowest paid workers and replacing it with a PRSI rate of 2pc on weekly earnings up to €440 per week. Income over €440 per week would then be charged 6 pc.

The lobby group believes the change would increase take-home pay for all full-time workers who currently earn less than €880 a week.

Isme, which represents small and medium-sized businesses, also suggested that any government spending used to ease ongoing inflationary pressures should be focused on those most in need through the welfare system.

Other measures proposed by Isme include government encouragement to increase the number of companies choosing to list on the stock exchange, as well as making it easier for employees to invest in these companies.

The group also spoke out against the trend of employers buying staff accommodation, arguing that the government must help attract private landlords to the rental market through the tax system. Isme also said the government needs to address the cost of funding the deep renovation in the budget because of its spending.

“With economic data showing a continued divergence between the GDP economy, including multinationals, and the national economy, which is predominantly made up of SMEs, we need a comprehensive review of indigenous industrial policy stakeholders. to improve the performance of our SME sector,” added McDonnell.