Minister hails expansion schemes

FINANCE Minister Brian Cowen says Business Expansion Schemes (BES) are necessary if job expansion at small Irish firms is to continue.

Minister Cowen said BES schemes have been good for manufacturing, good for jobs and good for investment in small firms.

The Irish Congress of Trade Unions (ICTU) is planning to make a complaint to the European Union about the Minister’s decision to extend the life of BES for another seven years. It says the BES are being used as tax breaks for wealthy investors.

In last December’s budget, Mr Cowen doubled the amount companies can raise to €2 million and upping the ceiling individuals can invest from €31,000 to €150,000.

A Department of Finance survey of nearly 1,400 firms who have used the schemes to raise money in recent years reveals that the majority of companies were raising small accounts.

According to the survey 21% of firms were looking to raise between only €100,000 and €250,000.

The cash raised allowed many of these firms to expand and export their products overseas.

A third of firms said they were able to spend on research and development and 40% said it led directly to hiring more employees.

Minister Cowen said: “I am confident that the expansion of the scheme I announced in the Budget will further support our enterprise culture. This is not risk-free investment: a return on the investment is contingent on the company making a go of it. We vitally need such schemes if we are to create more jobs in small manufacturing firms.”

He added that these points would be made “strongly” to the European Commission in seeking approval under State aid rules to continue the scheme.

Responding to the survey Irish Taxation Institute (ITI) chief executive Mark Redmond said the results provide compelling evidence that BES are central to creating and sustaining economic activity.

“This review shows that taxation is at the apex of the Irish economy, especially for the small business sector. It presents compelling evidence that innovative tax policy like BES help companies grow, creates jobs, leads to improved services, supports Irish exports and generates revenue for the Exchequer.”