Small and Medium Enterprises

Dáil Éireann Debate, Thursday - 12 October 2023

Thursday, 12 October 2023

Ceisteanna (44, 58)

Barry Cowen

Ceist:

44. Deputy Barry Cowen asked the Minister for Enterprise, Trade and Employment what action he is taking assist SMEs with the cost of doing business; and if he will make a statement on the matter. [44198/23]

Richard Bruton

Ceist:

58. Deputy Richard Bruton asked the Minister for Enterprise, Trade and Employment if he has analysed the main sources of pressure on business costs at present; and how he believes these might best be addressed. [44200/23]

Freagraí scríofa

Minister for Enterprise, Trade and Employment

I propose to take Questions Nos. 44 and 58 together.

This has been a challenging year for firms as they grapple with the effects of global inflationary pressures and supply chain disruption. As a small, open trading economy Ireland is exposed to global inflationary pressures, including fluctuations on international markets for energy, commodities and food. Ireland is effectively a price taker on most international markets, and many of the drivers of Irish inflation are outside our control. Our remote geographic location can also add to transport costs for goods, which along with our small market size, can add to costs for businesses.

As a result of these inflationary pressures, input costs have gone up for many businesses. However, wholesale price inflation has levelled off across a number of areas in recent months. Irish wholesale electricity prices were 72.5% lower in August 2023 than in August 2022, and while wholesale prices for construction products rose by 2.1% in the year, overall, manufacturing producer prices were 0.3% lower in August 2023 than August 2022.

Although the Government cannot fully insulate individuals and businesses from developments in international markets that are outside of our control, we have been proactive in putting in place measures to remedy the fallout from higher rates of inflation. The Government is committed to supporting enterprise and Budget 2024 continues this approach. Among the measures included, are:

• The 9% VAT reduction for gas and electricity is being extended for an additional 12 months, until 31st October 2024;

• The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil which were due to expire on 31st October 2023 are being extended until 31st March 2024;

• An increase in the limit on the amount that an investor can claim relief on under the Employment and Investment Incentive Scheme, to €500,000;

• An increase in VAT registration thresholds for SMEs to €40,000 for services and €80,000 for goods;

• Reduced Capital Gains Tax rate of 16% for Angel Investors in innovative SMEs, on gains of up to €3 million;

• An increase in the R&D tax credit from 25% to 30%, as well as increasing the first-year upfront payment from €25,000 to €50,000, which will be of particular benefit to SMEs;

• The commencement of a range of amendments to the Key Employee Engagement Programme for the attraction and retention of staff;

• Introduction of the Increased Cost of Business Scheme, which will provide a once-off grant to benefit up to 130,000 small and medium businesses at a cost of €250 million.

In September, the National Competitiveness and Productivity Council published its annual ‘Ireland’s Competitiveness Challenge’ report. This report includes recommendations for Government relating to the cost of doing business. The Government will consider and respond to these recommendations in due course.