‘Pay restraint a must to protect competitiveness’

The Irish Exporters’ Association has called for restraint in public sector pay rises and accused the Government of lacking the courage to tackle the issue in the proper manner.

‘Pay restraint a must to protect competitiveness’

The association opposes flat-wage increases and has called for a reward-based structure based on accountability. It says it is “bitterly disappointed” the Government has not had the courage to implement this.

Such a reward-based system would limit the overall cost to the exchequer and greatly increase productivity, the representative body claims in its pre-budget submission.

“The principle of rewarding those who try harder and deliver more, whether in the public or in the private sector, whether entrepreneur, employer, employee, or job seeker is not only just but serves the wider public interest and, indeed, a far larger electorate,” the document reads.

Public sector pay increases, the body adds, should be limited to no higher than the annual rate of inflation.

The objection to flat pay increases — like the €2,000 hike agreed upon earlier this year for public servants — is part of a wider call to protect the country’s competitiveness which was largely restored during the recession.

In this context, the body has called for more resources to be made available to exporters particularly through Enterprise Ireland, Bord Bia, and the Diplomatic Service.

These resources, it is suggested, could be used to open up new channels to market for all exporters operating here, from small indigenous companies to large multinationals.

A range of alterations to the tax code to support exporters are also suggested, including amending the research and development tax credit regime to allow firms to obtain a full tax rebate in the year the qualifying expenditure is incurred.

Currently, where a company is loss making and does not have sufficient corporation tax liabilities against which to utilise the credit, a refund of the credit is paid over three years which can cause cash-flow difficulties and delay R&D activity.

The exporters’ association recommends decreasing the three-year refund period by granting a full tax rebate in the year the qualifying expenditure is incurred.

To target the changes at smaller companies perhaps more in need of the funds, consideration could be given to giving a refund in year one for refunds of €100,000 and less.

Echoing recent calls from bodies such as the Cork Chamber of Commerce and Dublin’s Startup Commissioner, Niamh Bushnell, the body has also urged the Government to “level the playing field” for entrepreneurs.

“It is the view of the Irish Exporters Association that the current penalties suffered for being an entrepreneur and an employer in Ireland are not only unjust but dangerously undermine one of the very important foundations of wider economic development,” the pre-budget submission reads.

The body urged the Government to reduce the rate of Universal Social Charge levied against entrepreneurs to those paid by PAYE workers.

The UK capital gains tax (CGT) entrepreneurs relief is also singled out as a measure that should be adopted here. The UK relief means CGT is charged at just 10% on the first £10m (€13m) of qualifying gains on the sale of a business, as opposed to 33% in Ireland.

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