Economy can grow 4% annually with right reforms, claims Ibec

The Government has to reduce the tax burden, streamline and make public services more efficient, support entrepreneurs, invest in infrastructure, and improve the quality of the education system, according to the employers’ group Ibec.

It will outline its priorities for the years ahead in a policy document to be unveiled in Dublin this morning.

Ibec said that if the right reforms are implemented then the economy has the potential to grow by an average of 3% to 4% each year for the next 20 years.

Ibec director of business representation Mary Rose Burke said: “Across a range of important areas the country is not working as it should and the Government needs to act.

“We have important choices to make on how to build on the economic progress already made, tackle unemployment and drive growth across the economy. We need to get these right.”

Top of its list of priorities is reducing the tax burden. Ibec wants the entry point to the higher rate of taxation increased.

Moreover, it wants to reduce the fully loaded marginal income tax rate below 50%.

Among other measures it also wants to reform capital gains tax, “to support enterprise investment over speculative activity.”

“The tax system is not working for growth. The tax burden is too high and is a drag on employment, investment and consumer spending,” said Ms Burke.

“It makes the move from welfare into work less attractive and makes it more difficult to attract mobile talent to the country.

“In the next budget, the Government should increase the income entry point to the higher marginal tax rate and reduce the marginal income tax rate below 50%.

“The unfair pensions levy should be dropped and excessive excise increases, which have put us way out of line internationally, should be reversed.”

The policy document also calls for greater efficiencies across government services, the removal of unnecessary regulation and to reform the procurement process in order to reduce costs and encourage SME participation.

Investment in infrastructure should reach 4% of GDP by 2020 with an emphasis on education and skills. It wants a sustainable funding model for the third-level sector.