The advisory group on tax and social welfare has recommended an increase in pay related social insurance rates for the self-employed.

A new report by the group, which advises Social Protection Minister Joan Burton, says the rate should be raised from its current level of 4% to 5.5%.

The group said the increase in PRSI contributions would cover the cost of long term illness and disability benefits, which are not available to self-employed workers at present.

The recommendation has been opposed by various business groups including the Small Firms Association and ISME, as well as the IFA and Chambers Ireland.

ISME described the proposal as ''utter madness at a time of hardship''. Its chief executive Mark Fielding said the current system in Ireland is completely unfair and is ''based on antiquated, bureaucratic and cumbersome legislation, which penalises the self-employed and denies them their social welfare entitlements''.

''The failure to provide supports to entrepreneurs not only sends out the wrong message in promoting an enterprise culture but also disregards and disrespects the significant contribution of these individuals to the economy,'' he added.

The SFA said the the proposal to increase PRSI the self-employed shows ''a Minister who does not understand the challenges being faced by small business owners in Ireland today''.

''The economy and Irish workers are taxed enough. Additional costs will push already struggling owner managers out of business and fuel the unemployment crisis,'' commented the SFA's Avine McNally.