Dáil Éireann debate -
Tuesday, 12 Apr 1994

Vol. 441 No. 1

Written Answers. - Task Force Report.

Ivor Callely

Question:

84 Mr. Callely asked the Minister for Enterprise and Employment the recommendations contained in the task force report on small business that may have little, if any, cost burden on the State if implemented; the total cost to the State if all recommendations were implemented; the likely benefit to the economy; and if he will make a statement on the matter.

Minister for Enterprise and Employment (Mr. Quinn)

As the task force's report makes around 90 recommendations, it is not practicable to list individually all of the recommendations that would place little, if any, cost burden on the State.

In the main, the task force proposals dealing with the administrative burden on small business, linkage and public procurement, new representative structures for small business as well as the proposals addressed to the banks or other private sector bodies would fall into this category.

The task force recommendations that would have cost implications for the Exchequer are mainly those dealing with taxation, prompt payment, and new or enhanced information, advisory, training, or other services for small business.

The main tax proposals for which the task force was able to obtain costings were those concerning the extension of the PAYE and PRSI allowances to proprietary directors and their spouses working full-time in a family business, the reintroduction of a modified scheme of dividend relief, and the introduction of a 25 per cent small business rate of corporation tax on profits of up to £80,000 returned by companies with an annual turnover below £3 million. On the basis of information supplied to the task force by the Department of Finance, the cost to the Exchequer of the tax revenue that would be foregone in the event of the full implementation of these measures would be around £56 million. The task force proposed, however, that if the cost of extending the PAYE and PRSI allowances were considered unsustainable, these allowances should be abolished and redistributed among employees, proprietary directors, and the self-employed in the form of increased personal allowances. This proposal would be revenue-neutral. The task force also recommended that the introduction of the small business rate of corporation tax should be phased in over three years so as to reduce the immediate cost impact.

The task force recommendation that public bodies would be statutorily required to pay accounts by the end of the month following the date of issue of an invoice would involve a once-off cash flow loss to the Exchequer. The Department of Finance was unable to provide an estimate of this loss to the task force. As funds have been made available to tackle the causes of the late payment problem in the health sector, the task force did not think that this once-off cost would be excessive.

The design and formulation of the business information system recommended by the task force would also have cost implication for the Exchequer. The task force made a number of recommendations intended to ensure that such a system could be introduced as economically as possible. It also recommended that the subsequent costs of operating the system should be met from savings in the budgets of other agencies engaged in enterprise support and development. With the exception of a pilot programme to provide specialised training to clusters of companies that would cost an estimated £200,000, the task force proposed that other additional training programmes should be provided on a break-even basis.

It is not possible to quantify the likely benefit to the economy of the implementation of the task force proposals. In the task force's view, the long term stimulus to the economy and employment would more than repay the short term cost to the Exchequer. As it stated in its report, a strong and thriving private sector is the best guarantor of a strong and solvent Exchequer.