Ireland is home to 248,344 Small-Medium Enterprises employing 968.881 people. While Foreign Direct Investment (FDI) receives a lot of attention, Renua believes that Government must focus on measures to help our domestic enterprises grow and prosper.
A: Business Loans
- According to the latest available data Irish businesses are paying an average interest rate of c6% on loans – almost twice the rate payable in other Eurozone countries. For example, in November 2015 the interest rate on a business loan of up to €250,000 in Ireland was 6.56% compared to a Euro-area average of 3.15%.
- Irish banks maintain the practice of requiring personal guarantees when lending to limited companies. There is also some evidence that Irish banks are demanding pre-signed letters of resignation from the Directors of limited companies before loans are offered.
- Establish real competition in the Irish banking sector by harnessing the network of An Post offices and Credit Unions to establish a German-Style public bank in Ireland. German public banks are typically owned by Federal, Regional or Local Government with profits used to both secure its capital base and distributed for the benefit of local communities.
- Instruct the Central Bank to issue guidelines to aid the development of peer-to-peer lending in Ireland.
- Introduce laws to specifically prevent banks from demanding personal guarantees and pre-signed letters of resignation when offering loans to businesses. Banks need to get back to basics by fully analysing a lending proposal and making their decision solely on that.
- Renua Ireland will support the growth and development of the social enterprise sector in Ireland. We will instruct Local Enterprise Offices (LEO’s) to accept funding from Social Enterprises.
B: Labour Costs
- The minimum wage in Ireland is €9.55 – the second highest in Europe.
- Ireland is an expensive country in which to live but Renua believes that imposing extra costs on employers is a short-sighted and politically convenient means of dealing with that issue.
- Abolish the ‘Low Pay Commission’.
- Link any further minimum wage increases to 3-year average inflation. We will also defend the “ability to pay” clause for employers.
- Focus Government on reducing the high-cost of living in Ireland – please see our ‘Cost of living’ policy under the ‘Taxpayer First’ Pillar.
- Reduce the rate of Employer’s PRSI for those earning less than €380 per week to 4.25%.
C: National Training Fund
- The National Training Fund is paid for via a 0.71% levy on Employer PRSI.
- However, the focus of the fund is largely weighted towards the unemployed – 77% of the funds spending is on ‘For Employment’ activities and just 23% of spending is dedicated to ‘In Employment’ activities.
- Employers pay for the National Training Fund but are largely ignored when seeking funds to help upskill their workforce.
- Reform the National Training Fund so that a minimum of 55% of spending is dedicated to ‘In Employment’ activities where the employers who pay for it can access the fund for the benefit of their workers.
D: Helping Small Businesses Grow
- In Ireland we discourage start-ups and high potential growth small businesses with a punitive taxation system.
- While much coverage has been dedicated to predicting the potential benefits of Brexit to Ireland we need to be mindful and prepare for the potential risks.
- We believe that our high rate of Capital Gains Tax (CGT) poses a potential risk to our economy if Irish companies decide to move their operations to the UK to take advantage of that country’s far more favourable CGT regime for Entrepreneurs.
- We also need to encourage an increase in ‘Angel Investing’ in Ireland. It is wrong to punish those who take a risk and support Irish businesses with a punitive tax regime.
- Abolish tax on stock options at companies that are younger than 10 years, have fewer than 50 employees and revenue and a balance sheet of less than €8m. Such a policy is already in operation in Sweden and has already been approved by the European Commission.
- Increase the lifetime limit on gains from the disposal of businesses from €1m to €15m. Entrepreneurs will pay a reduced rate of CGT (10%) on all gains made up to the lifetime limit of €15m. The relief will be available to all those who own a minimum of 1% of a business.
E: Commercial Rates
- Commercial Rates is the single biggest earner for Local Authorities in Ireland. However, it is a tax which breaks many of the rules of a good taxation system – it is expensive to collect, is not progressive, takes no account of a businesses’ ability to pay and lacks certainty.
- Local Authorities use Commercial Rates to plug gaps in overall budgets and it is often difficult for businesses to see what benefit they derive from paying rates.
- Introduce a nationwide relief scheme to reduce commercial rates for struggling businesses. This will be funded by the imposition of a levy on vacant commercial properties.
- Ask our proposed Commission On The Future of Taxation and Welfare to recommend a new system to better fund local government in Ireland.
F: Small Business Exemption Voucher
- The current limit for the small business exemption (voucher) is €500.
- Increase the limit to €650 to help businesses reward their employees without incurring benefit-in-kind taxes. Increasing this limit will not only help employers reward their employees but also benefits the local economy through increased spending.