The Small Firms Association (SFA) has urged the Government to be more “ambitious” in its spending approach, in the October budget, by increasing capital expenditure to 4% of GDP.
In its pre-Budget submission — published this morning — the lobby group has warned that Ireland’s economic growth cannot be taken for granted and has challenged the Government to deliver on its commitment to ending what it calls “discrimination” against the self-employed.
The SFA wants the self-employed earned income tax credit increased to €1,650 — equal to the PAYE tax credit — in Budget 2018. It also wants a share-based remuneration scheme for small firm employees introduced, in order to help staff retention and productivity levels, and the lifetime limit for capital gains tax (CGT) entrepreneur relief increased to €15m.
“Ireland has experienced a decade of under-investment in infrastructure. The vast majority of capital expenditure is currently spent on maintenance and repair as opposed to growing the country’s social and economic capacity. This economic model is not sustainable if Ireland is to maintain its economic performance, and it is certainly not a recipe for improved competitiveness,” according to SFA chairperson Sue O’Neill.
The CGT entrepreneur relief, Ms O’Neill said, is all about properly ‘Brexit-proofing’ the Irish economy. “The UK is one of our biggest competitors for mobile investment and has a lifetime limit of £10m for entrepreneur’s capital gains tax. Ireland must become a more attractive destination for starting a business or investing in a small firm, by increasing the lifetime limit for CGT entrepreneurial relief to €15m.”
The share-based remuneration scheme, she said, could — as has happened in the US — allow SMEs to grow more rapidly with relatively low costs, while employees may reap huge rewards.
“Despite an upswing in recent months, small business confidence is still below the levels recorded before the UK’s vote to leave the EU. Budget 2018 must give firms the best possible opportunity to generate future economic growth by removing existing constraints and taking a ‘do no harm’ approach with any new initiatives,” she added.
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