Manufacturing & Supply Chain

Economic growth cannot be taken for granted – SFA

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Economic growth cannot be taken for granted – SFA

Economic growth cannot be taken for granted – SFA
August 29
09:00 2017
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Launching the SFA’s pre-Budget 2018 submission, Sue O’Neill, SFA Chair, said: “Continued economic growth cannot be taken for granted. If our country is to prosper over the coming years, it is vital to create an environment supportive of small business. Small businesses have been major contributors to growth, job creation and regional economic recovery and will continue to be, if the right choices are made in Budget 2018.”

The SFA is calling on Government to focus on a small number of priorities that will create the biggest impact with the resources available:

    1. Increase the self-employed Earned Income Tax Credit to €1650, equal to the PAYE tax credit
    2. Introduce a workable share-based remuneration scheme for employees of small firms
    3. Increase the lifetime limit for CGT Entrepreneur Relief to €15 million4. Increase capital expenditure to 4% of GDP per annum

Ms O’Neill continued: “Government policy continues to discriminate against the self-employed. The gap between the self-employed Earned Income Tax Credit (€950) and the PAYE tax credit (€1650) means that entrepreneurs and owner-managers pay more tax than employees on the same gross income. The Government made a commitment in the Programme for a Partnership Government to level the playing field by Budget 2018. It must now deliver on this commitment.

“An employee share option scheme tailored to small firms would improve staff retention and productivity in small and new firms, in particular at senior levels, by providing a long term incentive and increasing employee buy-in. In the US, paying employees partly through a stake in the business has allowed many start-up businesses to grow rapidly with relatively low costs, while employees can reap huge rewards. The scheme should be simple and easy to understand. It should waive the income tax, USC and PRSI due; instead, employees should only be taxed on the capital gain from the sale of the shares.

“Budget 2018 must also be truly Brexit-proofed. The UK is one of our biggest competitors for mobile investment and has a lifetime limit of £10 million for entrepreneur’s Capital Gains Tax (CGT). Ireland must become a more attractive destination for starting a business or investing in a small firm, by increasing the lifetime limit for CGT Entrepreneurial Relief to €15 million.

“Ireland has experienced a decade of under investment in infrastructure. The vast majority of capital expenditure is currently spent on maintenance and repair as opposed to growing the country’s social and economic capacity. This economic model is not sustainable if Ireland is to maintain its economic performance, and it is certainly not a recipe for improved competitiveness. The Government must take a more ambitious approach to investment, and capital expenditure must reach 4% of GDP as soon as possible.

“Despite an upswing in recent months, small business confidence is still below the levels recorded before the UK’s vote to leave the EU. Budget 2018 must give firms the best possible opportunity to generate future economic growth by removing existing constraints and taking a “do no harm” approach with any new initiatives.”

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