A government-supported equity finance scheme for entrepreneurs, combined with a reform of capital gains tax (CGT) and a reduction in the rate of PRSI are included in the Small Firms Association (SFA) pre-budget submission.
“Access to funding for small business continues to be difficult and a 30% equity investment is now demanded by the banks before they grant approvals for small business loans. “The State has a key role to play in enabling entrepreneurs to meet that equity investment threshold, through enhancing the current Employment and Investment Incentive Scheme, which is completely under-utilised due to lack of awareness and over-complexity. “This scheme allows people who invest in small businesses a tax right-off,” said SFA chairman AJ Noonan.
The SFA has also called on the Government to introduce an “across-the-board” 20% CGT. Moreover, it wants a special relief equivalent to 10% of CGT for an entrepreneur about to sell a business. The CGT has been increased from a rate of 20% in 2008 to a current rate of 33%.
Mr Noonan said it was important that the Government “level the playing field” between the self-employed and PAYE workers and that it reduces overall labour costs. Specifically, the 3% USC surcharge on the self-employed should be allowed expire this year as scheduled, and the lower rate of employer PRSI should be reduced from 8.5% to 4.25%, he said.
“Proprietary directors should receive the PAYE tax credit, where they pay tax on a PAYE basis and that a voluntary PRSI contribution should be introduced, to allow entrepreneurs and self-employed qualify for all social welfare benefits similar to their employees. Any proposal which provides social welfare benefit for owner- managers cannot be mandatory or viewed as an opportunity to impose additional taxes on small business.”
Chambers Ireland has also issued its pre-budget submission. Included among its priorities are the abolition of the 80% windfall tax on re-zoned land, with any gains falling under CGT rules. This will facilitate much-needed residential development in areas where there is pent-up demand, it said.
A reduction in marginal tax rates to below 50% to reward employment, support enterprise, and attract high-value foreign direct investment jobs. Similar to the SFA, it wants a reduction in CGT to 20% for active investments and improve the Employment and Investment Incentive and the Seed Capital Scheme to encourage entrepreneurs to invest and create jobs. It also wants to see the reinstatement of the lower rate of employers’ PRSI for Class A staff, to encourage businesses to take on new employees and maintain and give certainty on the 9% Vat rate in the hospitality sector, which supports the national hospitality and tourism industries.
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