Dáil Éireann Debate, Wednesday - 15 November 2023
67. Deputy Willie O'Dea asked the Minister for Enterprise, Trade and Employment what plans or strategies he has to support the SMEs of Ireland to prevent hours from being cut, job layoffs, or businesses shutting down as a result of the rising costs of doing business, including as a result of extra costs from measures introduced by the Government; and if he will make a statement on the matter. [50228/23]
View answerIt is understandable that businesses are concerned about the impact of rising costs.
The Government has provided significant support to business throughout the period of increasing overheads and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. However, it is not possible to insulate every business from the total impact of these costs.
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.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, 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 contained a number of measures which will support businesses facing increased costs of doing business.
• 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 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 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, 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.
The Government’s approach to enterprise policy continues to be guided by the priorities set out in the White Paper on Enterprise 2022-2030 – published in December last year. The White Paper aims to ensure that Irish-based enterprises can succeed internationally, through a focus on innovation and productivity. To achieve the vision set out in the White Paper on Enterprise, across Government we are focused on seven priority enterprise policy objectives:
• integrating decarbonisation and net zero commitments;
• placing digital transformation at the heart of enterprise policy;
• advancing Ireland’s FDI and trade value proposition;
• strengthening the Irish-owned exporting sector;
• enabling locally trading sectors to thrive;
• stepping up enterprise innovation; and
• building on Ireland`s existing strengths and opportunities, through a clustering approach.
Wider supports for SME`s and Entrepreneurs set out in the White Paper on Enterprise 2022-2030 include; supporting firms to decarbonise and providing fiscal support for firms in the green and digital sectors; improving access to finance for start-ups and scale-ups; increasing the number of first time exporters; increasing productivity growth in domestic sectors; expanding programmatic supports to capture additional SME`s/Entrepreneurs; enhanced assistance for HPSU`s; and reducing the regulatory burden on SME`s/Entrepreneurs.
The White Paper also includes an examination of the key components of the competitive enterprise environment including cost of doing business, alongside infrastructure, skills and talent, access to finance, taxation and regulation. The first Implementation Plan for the White Paper on Enterprise was published in May of this year, and identifies a portfolio of 40 new and ongoing initiatives and projects across the seven priority objectives set out in the White paper. The first update report detailing progress made across Government on these initiatives and projects is due to be published shortly.
