Dáil Éireann Debate, Wednesday - 15 November 2023
65. Deputy Cathal Crowe asked the Minister for Enterprise, Trade and Employment if he would consider additional mitigation measures to ensure that small and medium sized business are able to absorb some of the additional costs that they have recently faced, e.g. increased wage bills, overheads and so on. [50062/23]
View answerIt is understandable that SMEs are concerned about the rising costs they are encountering at the moment. The impact of rising prices is not unique to Ireland, but an issue facing all major economies around the world as the effects of the pandemic unwind with the rapid resumption of economic activity, and more recently the geopolitical uncertainty following the invasion of Ukraine.
Inflation in Ireland – although still elevated at 5.1 per cent in October – is generally declining and is down from 6.4 per cent in the 12 months to September 2023. In its most recent quarterly bulletin, the Central Bank of Ireland have forecasted inflation to fall to 3.2 and 2.3 per cent in 2024 and 2025, respectively.
The Government has provided significant support to business, including SMEs, throughout this period of rising costs and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. It is, however, not possible to insulate all businesses from the full impact of rising costs.
Prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses. The main programme introduced by Government to alleviate cost pressures for small business was the €1.3 billion Temporary Business Energy Support Scheme (TBESS).
Budget 2024 also contained a number of additional measures which will support businesses facing increased costs. These include:
• 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.
The Increased Cost of Business Grant (ICOB) was also announced as part of Budget 2024 and will be targeted at Small and Medium sized businesses who operate from a rateable premises. Firms who do not have a rateable premises are not within the scope of this scheme. It is important to be clear that this scheme is a once-off grant aid provision and not a commercial rates waiver. It will have no bearing on the commercial rates paid by firms. The grant is intended to aid firms but is not intended to directly compensate for all increases in costs for every business.
In line with a recommendation from the National Competitiveness and Productivity Council in its report Ireland’s Competitiveness Challenge 2022 there is currently an assessment being undertaken by the Department of Enterprise, Trade and Employment and the Department of Social Protection which will examine the cumulative impact of measures including Pension Auto-Enrolment, Parent’s Leave and Benefit, Statutory Sick Pay, Additional Public Holiday, Living Wage, and Remote Working. The report is due for publication later in Q4 2023 and will inform public policy in this area.
The Government is continuing to monitor the situation, however no new measures are currently under consideration beyond what has already been announced.
