Dáil Éireann Debate, Wednesday - 30 April 2014
263. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the estimated gross contribution of Enterprise Ireland-supported companies to the GDP output of the economy; and if he will make a statement on the matter. [19123/14]
View answer265. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the total estimated tax contribution to the Exchequer in terms of payroll and corporation tax of Enterprise Ireland-supported companies; and if he will make a statement on the matter. [19125/14]
View answerI propose to take Questions Nos. 263 and 265 together.
Enterprise Ireland (EI) is the agency under my aegis with responsibility for the development of Irish enterprise, deepening Ireland’s footprint in world markets, and supporting employment creation in our economy. In that regard, the primary measures of economic impact targeted by the agency include the number of jobs created by EI client companies, their total employment, increases in exports, increases in innovation, research and development activity, and the number of High Potential Start-Ups (HPSUs) supported each year – all of which are pursued in the context of increased prosperity in Ireland.
Total direct employment (full and part time) in EI client companies stood at 175,750 in 2013, according to the Forfás Employment Survey. Of these, 149,718 were full-time jobs, while 26,032 were part-time. These companies are a vital source of employment in every county in Ireland and are spread across a wide range of sectors. Within this total level of employment, EI supported companies created 18,033 new jobs in 2013. This resulted in a net increase of 5,442 in the number of people employed, the highest net gain for Irish companies in the last decade and built primarily on the strong export performance of Irish companies. This continuation of employment growth demonstrates clearly the direct impact that increasing exports has on jobs in Ireland. Exports by EI supported companies reached €16.2bn in 2012, and are expected to have exceeded €17bn in 2013. These companies, directly and indirectly, are estimated to account for more than 300,000 jobs in the Irish economy (approximately 16% of the total number at work). The impact of these companies is of course a very substantial contribution to the growth of the economy, including the scale of Gross Domestic Product (GDP), and Exchequer funds including Income and Corporation Taxes.
In relation to an estimate of the gross contribution to GDP from Enterprise Ireland’s clients, the latest available figures available for preparing such an estimate relate to 2012. Preliminary 2012 GDP figures, as reported by the CSO, show GDP of €163.938bn. The total output of EI clients in 2012, was €30.144bn, or 18.4% of GDP. Gross figures should however, be used with caution as they do not represent final contributions to GDP as not all products/services may be considered as final outputs for the purposes of calculating GDP. On the basis of estimated value added by EI clients in 2012 (€11.153bn), the direct contribution of estimated value added, totals 6.8% of GDP. An important element of the impact of EI client companies in the economy is of course the expenditure made on payroll, and locally sourced goods and services in Ireland. In 2012, this totalled €18.9bn.
The Deputy also asked for estimates in relation to the total tax contribution to the Exchequer in terms of payroll and Corporation Tax of Enterprise Ireland client companies. It is important to note that Enterprise Ireland does not collect official data or statistics on the payroll or Corporation Taxes paid by its clients. However, the agency as part of the Forfás Annual Business Survey of Economic Impact (ABSEI), collects some data which can be used to prepare indirect estimates. The Forfás ABSEI is a voluntary enterprise agency client survey, which inter alia, surveys companies as to the total output of an undertaking, the total payroll expenditure of an undertaking, and the total goods and services expenditure of an undertaking.
As such, in respect of the payroll tax contribution estimate, Enterprise Ireland has produced an estimate based on average payroll at an aggregate level, and compared this with the latest Revenue Commissioners Statistical Report for 2011 which illustrates effective rates of tax for specimen incomes. Given the limitations of the data, it is not possible to determine a distribution of incomes earned within client companies, nor data relating to the status or application of reliefs or assessment which impact the final contribution. Using this limited basis, an estimate of €1.14bn in annual employee income taxes can be estimated. In addition to income taxes, employers’ taxes are also a payroll related contribution to the Exchequer. Taking these elements together, Enterprise Ireland estimates a total contribution to payroll taxes in the region of €1.5bn in respect of its client base.
In relation to Corporation Taxes, a profit estimate based on total estimated value added less the cost of payroll/other costs is calculated, before applying the average effective tax rate which is taken from recent research by the Department of Finance. Based on this analysis an estimated Corporation Tax contribution is arrived at, of €388m. Again, caution is advised in the use of this figure as the component data is estimated and not based on actual Corporation Tax returns for Enterprise Ireland client companies.
Taken together, the data demonstrates that Enterprise Ireland client companies, located in every county in Ireland, continue to make a substantial economic impact at a critical time in the State. Enterprise Ireland is keenly focused on its ongoing mission to support companies and employment creation in Ireland.
