• IEA Pre-Budget Submission 2017

    The Irish Exporters Association Pre-Budget Submission 2017 sets out recommendations in the following areas:

    Cost Competitiveness

    Rising insurance costs

    • Government intervention in the case of rising costs of insurance to deter the negative effect that that is having on business costs. Measures need to be taken to encourage new players to compete in the market to drive down the rising cost from insurance providers.
    • These include a review of insurance costs at Oireachtas Committee level, a comparison of premiums and pay-outs against the UK and other EU countries, and a set of recommendations to be made for maximum pay-outs for insurance claims, in line with those in the UK.

    Housing crisis

    • It is clear that residential house building must increase drastically over the current levels. While the new Minister for Housing is welcomed, resources need to be focused to drastically increase supply and control measures need to be put in place to curtail rent inflations across the board, not just for tenants in situ.

    Minimum wage restraint

    • The IEA recommends there be no changes to minimum wage in Budget 2017 and that the current level be frozen for a minimum of 3 years in order for the long-term implications of the UK leaving the EU to be further clarified.
    • In the event that there are increases to the minimum wage in Budget 2017, the IEA recommend a reduction in employers PRSI contributions to ensure no net cost to the employer. The UK will actively be targeting FDI and are already a serious competitor when Irish entrepreneurs are thinking of where to locate their growing business.

    Measures to protect business against Sterling depreciation

    • A National hedging strategy for GBP, managed by the NTMA and administered via the SBCI through the main commercial banks and relevant currency hedging providers. The aim of the product would be to offer a discounted exchange rate to those companies affected who want to avail of it, with the NTMA responsible for managing a set proportion of the underlying exposure.
    • This should be supported by a coordinated vigorous campaign to help SMEs to understand the need to build hedging into the long-term strategic and day-to-day management of their businesses.

    Mobile phone coverage and broadband access

    • Immediate solutions need to be sought to the coverage deficits to businesses and homes across the country if Ireland is to remain competitive in a technological age, improvements in broadband and a mobile phone infrastructure need to be immediate. Government should consider partnering with private industry to facilitate the rollout of broadband in a similar manner to our road building partnership strategy which has transformed the road network.

    Restraint in public pay

    • Restraint in public sector pay increases – limited to no higher than the annual CPI rate. A bonus system that rewards and recognises effort but only where KPIs are achieved.

    War for Talent

    • Concentration of resources to retain students in courses that will meet skills shortages in areas such as Life Sciences, Finance, Engineering, and IT.
    • Prioritise investment to address the skills shortages that exists and update the approved list of apprenticeships, elevating the standing of education through work. We also recommend incentivising employers to back apprenticeships of employees.

    Diversification of Export Markets

    • That Enterprise Ireland, Bord Bia and our Embassies receive a 10% funding to increase resources in high-growth markets specifically. This will ensure that resources in our biggest developed export markets are not affected. The role of our embassies should be reaffirmed and resourced to ensure they are mandated specially to deal with Irish exporters.
    • The IEA should be given a specific role for a campaign in partnership with Government & funded by them to drive our exports.
    • On 7th August 2014, Russia introduced an import ban for certain agricultural products originating from the EU including beef, pork and poultry meat, dairy products, fruits and vegetables. Russia has officially extended its ban on EU food imports until the end of 2017. Total goods exports to Russia halved from 2014 to 2015. Concentration of efforts at an EU level to resolve the issue of import bans in Russia as the indigenous food and drink sector in Ireland is being implicated and given that 44% of this sectors’ exports are currently destined for the UK, this is a time when this sector needs to be protected.

    Entrepreneurship

    R&D Tax Credits

    • Decrease the three year refund period by granting a full tax rebate in the year the qualifying expenditure is incurred capped at the payroll taxes paid by the company. To target the changes at smaller companies, consideration could be given to giving a refund in year one for refunds of €100,000 and less. This could minimize the cash outflow for the Exchequer while helping to accelerate the payments to smaller companies who rely on the credit as an important source of funds. The level of paperwork and documentation required to claim the benefit of the credit is extremely onerous and off-putting for start-up companies as it drains management resources. A more streamlined interview based approach would be welcomed in supporting any such claims.

    Share Incentive Scheme for Entrepreneurs

    • Exempt from benefit in kind, employer loans used by employees to fund the acquisition of shares/share options from their employers.

    Intellectual Property

    • S291A(7) and s766 could be amended such that the R&D credit and s291A could be claimed on expenditure incurred on self-developed IP.
    • Alternatively, the law could be changed to facilitate some form of election back into s291 out of s291A in order that allowances would be available at 12.5% p.a over 8 years with such expenditure also qualifying for the R&D credit.

    Withholding Tax

    • Amendments to allow unused withholding tax credits to be carried forward to future periods and to be available for offset against future corporation tax.
    • Amendments to allow the pooling of the credit against royalty income from other jurisdictions.
    • Tax exemption for dividends and branch profits repatriated to Ireland.

    Levelling the playing field in terms of tax for Entrepreneurs, PAYE & USC Rates

    • A reduction of the higher USC rate for entrepreneurs as illustrated to PAYE levels.
    • Phase out of USC over the medium term by reducing rates, increasing the band ceiling and increasing the exemption threshold to reduce very low earners.
    • The introduction of the equivalent of the PAYE Tax Credit to entrepreneurs.
    • Class S PRSI contributions for the self-employed that would allow qualification for social welfare benefits similar to those of employees.

    Capital Gains Tax / succession planning for family owned export businesses

    • That business relief is reviewed and the age limited eliminated (or at least increased to age 70) as a specific requirement to avail of the relief.
    • A reduction in capital gains tax rate for entrepreneurs selling their business, similar to 10% and increase the €1m lifetime gain threshold to €10m. This should be extended to angel investors who invest in EIIS shares.
    • A 10% tax rate on dividends from eligible companies with a €10m lifetime cap to make it neutral for an entrepreneur to realise profits by sale of shares or receipt of dividends.

    Click here to download a full copy of the submission.