Budget 2014 must be the last austerity-led adjustment if investors’ confidence in Ireland is to grow, the Irish Exporters’ Association has warned.
In its pre-budget submission to Government, the IEA (the main representative body for the country’s 13,000 manufacturing companies) has called for more incentives for Irish companies to export and a lower and more competitive capital gains tax.
The IEA wants to see the further €500m tax take in October coming from indirect taxation, or other revenue streams, such as the 30% dividend on semi-state companies, rather than from income tax measures.
The association said the incentive to invest in export industries has been “heavily eroded” over the past five years, but this could be helped with a lowering in capital gains tax, an effective employment incentive investment scheme, an expanded foreign earnings deduction scheme to aid more exporters in reaching fast growing distant markets; an R&D scheme and a global distribution centre scheme to boost competitiveness.
According to IEA chief John Whelan, Ireland has lost its investment culture — with Britain and the US offering better terms to encourage investors to risk their funds investing in industry.
He added that there are currently too few Irish companies exporting and, with job creation options within the domestic market slim, it is all the more essential to support more firms in exporting.
“There is a very strong case for a full-blown effort to stimulate export growth in the 2014 budget,” Mr Whelan said. “Each job created is worth approximately €20,000 to the exchequer. If the IDA and Enterprise Ireland meet their jobs target for 2014, we will have 27,000 additional jobs in the export sector directly and another 27,000 indirectly in the wider economy.
“The total added employment expansion of 54,000 jobs will reduce the exchequer expenditure by approximately €1bn, but also bring in income. Hence, there should be no need for any further contraction in Government expenditure, or higher taxes, after 2014, if this job creation activity is delivered on,” he added.
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