State urged to introduce zero rate capital gains tax for investments
These are some of the proposals from one of the country’s leading analysts, who was speaking at the New Ideals for a New Future conference in Cork yesterday.
Chief executive of Merrion Stockbrokers, John Conroy, said the idea of creating a “bad bank” for property loans appears to be under active consideration by the Government.
“Banks would transfer problem assets to the property company in exchange for government-backed debt, or as is proposed in the latest US toxic asset plan, a public-private funded equity and debt programme,” he said.
Mr Conroy also said that as a short-term measure a possible way for the Government to help would be to introduce a reduced or zero capital gains tax rate for investments made over the next 12 to 15 months in businesses as a means of encouraging private equity capital into existing and new businesses.
The Cork conference was preceded by a similar event in Limerick, which was held earlier in the day at Thomond Park and organised by Senator Alan Kelly.
Economist Jim Power warned the Government it must not be over aggressive in terms of increased taxation in the mini budget.
“I know of no economy in the world that has ever taxed its way out of a recession. I know of plenty of economies that have taxed themselves into recession. So I think they need to be very light in terms of tax increases,” he said.
He said the major burden of adjustment has to come on the spending side.
“I think the Government could take out at least €4 billion from spending without anybody really noticing. If they take out €1bn or €2bn from the tax side, it could create serious difficulties for the economy. It is a difficult balancing act,” he added.
Ultimately, Mr Power said a new vision for our economy is required that is not based on manufacturing, construction or agriculture but something that is based on smart-thinking, flexible companies who can add value to goods produced.
Mr Power said: “We must pick the sectors which are winners. Information technology is one example of where we can gain an advantage and incentivise entrepreneurs in that field to make the smartest products in the world and promote growth. Our new vision of the Irish economy must be based on ‘entrepreneurial capitalism’.”
High-quality economic growth, he continued, is the only way to solve our current economic difficulties.
Conference organiser Mr Kelly said we will be entering an era where we must use “entrepreneurial innovation” to ensure our survival.
He said every sector of society is united towards the purpose of stimulating employment in these areas.
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