Richard Bruton
Question:4 Mr. R. Bruton asked the Taoiseach whether he has set out a timescale for the implementation of the task force on services.
Ceisteanna—Questions. Oral Answers. - Task Force on Services.
The Task Force on Jobs in Services produced its report in December 1993 and, as the Deputy will be aware, the report called for the implementation of some measures directly and for the further study of others.
I am pleased to say that, already, in the 1994 budget, a variety of measures recommended by the Task Force were adopted. These include the extension of the cash basis of accounting for VAT for certain companies, and the introduction of tiered rates of employers' PRSI. Other measures, such as raising VAT registration thresholds; reducing the rate of capital gains tax on the disposal of unquoted shares in trading companies; extending, beyond the BES areas, the special roll-over relief where funds from the disposal are reinvested in the broader services sector; and introducing a new capital acquisitions tax relief on business assets, also represent significant improvements for service enterprises.
As regards the various organisational proposal contained in the report, the Government is committed in the Programme for Competitiveness and Work to implementing many of these. For instance, the Department of Enterprise and Employment has been given overall responsibility for services. The Minister for Enterprise and Employment is currently establishing a specific unit to work on the formulation and co-ordination of policy on services.
As regards the areas highlighted for further study by the Task Force, the taxation of service enterprises is already being examined. A small interdepartmental working group, chaired by the Department of Enterprise and Employment, has been formed and is charged with undertaking a review of the international services programme. The group will examine the range of international service activity which can qualify for State assistance and for the reduced rate of corporation tax.
As regards the many other promotional and training recommendations included in the report of the Task Force and adopted by the Government in the new programme, the Central Review Committee will monitor their implementation during the life of the programme. Departments and agencies will be asked to bring forward proposals with regard to their implementation for examination by the committee and decision by Government.
I am confident that the measures already announced and those under consideration arising from my initiative to establish the Task Force last year will have a significant impact on job creation in service companies.
Does the Taoiseach recognise the frustration of many service businesses who discover that, having paid 21 per cent VAT, 21 per cent PRSI, 40 per cent corporation tax, not to mention PAYE contributions, they end up paying 60p in every £ they obtain from their consumers to the Exchequer, being left with approximately 2p only to plough back into their businesses? Does he not recognise that what he announced in his reply today does not represent any sea change in Government policy? Will he not agree that what we need is a time scale within which to address the issue of corporation tax, VAT and employers' PRSI in this sector, as was clearly outlined by the task force? Will he set about doing that?
What I have just said clearly represents a sea change in relation to Government policy within the overall services industry in that the Government has recognised that it will be a large contributor to the overall job creation programme. I recognise many of the problems referred to by Deputy Bruton and that is the reason I set up the task force and gave it a very short timescale in which to report. Many of the recommendations have been taken on board. The Central Review Committee of the Programme for Competitiveness and Work will monitor the introduction of other aspects of the programme. Some aspects are being further studied by the task force. The Deputy can take it that this is not the end of the road in relation to the implementation of the recommendations.
Will the Taoiseach agree that the exclusion of the services sector from the £100 million loan scheme announced by the Government was a clear breach of faith with what the Taoiseach said was the approach of Government to the services sector?
International traded services and tourism aspects are included in the loan scheme.
That was never the issue. The Taoiseach is evading that question.
I am proceeding now to other questions.
I wish to ask one supplementary question.
I am sorry, Deputy, I cannot facilitate you now.
I will be very brief.
I trust the Deputy in that regard.
May I ask the Taoiseach if the casual acquaintance with the tax man he demonstrated during his time in the United States is a period of Irish history that is past and that the concerns raised by Deputy Bruton about the punitive regime for the services sector — which is a main source of job creation now — ought to be looked at? Is the casual acquaintance which the Taoiseach remembers from his manufacturing days a thing of the past?
Leave personalities out, please.
That happened just about 34 years ago. As usual, Deputy Rabbitte is more interested in the sound bite than in getting proper information.
We now come to questions nominated for priority for which 20 minutes only are provided for in our Standing Orders.