Economic growth cannot be taken for granted - SFA priorities for Budget 2018

Monday, 28 August 2017

SFA PRE-BUDGET 2018 SUBMISSION:
    • Economic growth cannot be taken for granted
    • Government must deliver on commitment to end discrimination against self-employed


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 million
          4. 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.”

        Ends

        For further queries and interviews, please contact Sue O’Neill, SFA Chair, on 087 901 3311.

        Issued by Linda Barry, SFA Acting Director, email: linda.barry@sfa.ie, tel: 01 6051626 / 087 1472811.

        EDITOR’S NOTE

        A full copy of the SFA’s pre-Budget 2018 submission is attached.

        The SFA is the trusted partner of over 8,500 small businesses in Ireland. Its vision is of Ireland as the most vibrant small business community in the world – supporting entrepreneurship, valuing small business and rewarding risk takers.

        98% of all businesses in Ireland are small firms (less than 50 employees) and one in every two people working in the private sector is employed by a small business. They account for one third of the value of the Irish economy and of business investment. Small firms are also key to the vibrancy of our regions, as they represent more than half of total employment in 21 counties.

        More information about the SFA is available at www.sfa.ie or on Twitter @SFA_Irl
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