Small firms need UK-style tax breaks to ‘fight back’, compete post-Brexit – Dublin Chamber
BUDGET 2020 must help small, indigenous companies to compete with a “more attractive” UK, chambers of commerce leaders told an Oireachtas committee yesterday.
Dublin Chamber chief executive Mary Rose Burke, whose organisation represents more than 1,300 businesses, said capital gains tax rules punished risk-taking by startups. She told the Budgetary Oversight Committee that the current blanket 33pc rate should be reduced to 20pc “for all unlisted trading firms”, noting that the UK already had a similar policy.
“We need to foster an entrepreneurial environment and strengthen Ireland’s indigenous business base,” she said, referring to the State’s headline corporate tax rate used to woo multinational investment.
Ms Burke said Ireland’s 33pc tax on capital gains “applies irrespective of the level of risk taken by an entrepreneur and the contribution of the investment to the Irish economy”. She added: “The same tax is paid on passive investments in large blue-chip multinationals as is paid on high-risk Irish startups. This effectively incentivises investment in larger foreign firms over investment in Irish small and medium-sized enterprises (SMEs).”
Dublin Chamber said the UK tax policy was well ahead of Ireland’s in helping startups and SMEs – and could gain further competitive advantages post-Brexit.
“They’re already more attractive than us for entrepreneurs. So whether they stay or leave (the EU), we need to look to improve our competitiveness in ways that are under our control,” Ms Burke said.
“Irish entrepreneurs have had to look on enviously over the past decade as the UK has rolled out the red carpet for burgeoning business, with consistent tweaks and improvements to their tax regime. Ireland has been too slow to react, resulting in our nearest neighbour – and biggest competitor – being allowed to steal a march,” she said. “With Brexit on the horizon, it is vital that we react and fight back.”
Her Dublin Chamber board colleague, KPMG tax partner Eoghan Quigley, said he was confident that capital gains incentives for small businesses would boost employment and retail sales, and “yield more tax than they cost us”.
Mr Quigley said the UK would gain policy freedom post-Brexit to offer even more competitive tax incentives.
“They will be free of a lot of the state aid restrictions that we have here,” he said, arguing for Irish tax policy on small businesses to “mark” UK standards closely.
Chambers Ireland, the umbrella group for chambers of commerce across Ireland, told the committee that Brexit would not only harm the agri-food and tourism industries, but was likely “to have a broader impact, potentially depressing consumer spending in regional areas significantly”.
Chambers Ireland CEO Ian Talbot called for the Government to provide detailed long-term plans on the rollout of carbon taxes and green energy incentives.
“We believe there should be a schedule for such increases, which will have the double effect of not only helping business to plan for them, but will also bring greater predictability to the present value of energy efficiency measures, thereby encouraging viable investment,” Mr Talbot said.
Finance Minister Paschal Donohoe is due to present Budget 2020 on October 8.
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