Finian McGrath
Ceist:56. Deputy Finian McGrath asked the Minister for Finance if he will outline the tax and PRSI supports for small and medium enterprises on the north side of Dublin. [24480/13]
Amharc ar fhreagraTuesday, 21 May 2013
Ceisteanna (56)
Freagraí ó Béal (5 píosaí cainte)
In the November 2012 medium-term fiscal statement, my Department published a paper on the importance of small business to the economy. The paper highlighted that small and medium-sized businesses, SMEs, make up more than 99% of businesses in Ireland and account for almost 70% of people employed. To that end, as part of budget 2013, I included a ten-point tax reform plan containing measures to assist small business in a number of ways, including in regard to their cash flow position, access to funding, reducing the costs associated with the administrative burden of tax compliance, boosting demand for their products in new markets, and incentivising them to create jobs.
The ten measures are not subject to any geographic restrictions and will be applicable on the north side of Dublin or anywhere else where the SMEs concerned meet the relevant criteria. The first measure involves reforming the three-year corporation tax relief for start-up companies to allow unused credits to be carried forward, thus helping to create jobs and improve cash flow. The second measure is to amend the close company surcharge by increasing the de minimis level to €2,000 in order to reduce the administrative burden and assist cash flow.
Measure 3 involves increasing the amount of expenditure eligible for the research and development tax credit on a full volume basis, without reference to the 2003 base year, to €200,000 to encourage innovation and help cash flow. Measure 4 is to increase the VAT cash receipts basis accounting threshold from €l million to €1.25 million to help cash flow. Measure 5 extends the foreign earnings deduction for work related travel to Algeria, the Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania to help boost demand for Irish goods and services abroad, while measure 6 extends the employment and investment incentive scheme to 2020 to help companies access funding. Measures 7 and 8 would not perhaps be relevant to the Deputy's specific question, but I will include them for the sake of completeness. They concern extending the general rate and young trained farmers' rate of stock relief, amendments to the definition of registered partnerships for stock relief to give targeted assistance to the farming sector and introducing a capital gains tax relief for farmers for land restructuring to give targeted assistance to the farming sector. Measure 9 involves reviewing the "carried interest" provision in the tax code to help small businesses to access funding. Measure 10 involves the announcing of a joint Revenue and Department of Finance public consultation, Taxation of Micro Enterprises: Reduction in Compliance Costs, to identify ways to ease the administrative burden.
Additional information not given on the floor of the House
The Finance Act 2013 added two further provisions to this plan: amendment of the "key employee" provision of the research and development tax credit regime by reducing, from 75% to 50%, the proportion of time such an employee must spend solely on research and development activities in order to qualify for the credit - this should assist small and medium enterprises to avail of the provision; and amendment of the EII scheme to permit the operating or managing of hotels, guesthouses, self-catering accommodation or comparable establishments to qualify for the incentives.
These measures are in addition to existing taxation-based measures which are aimed at SMEs. These include the seed capital scheme, SCS, which is available to certain individuals who start a new business venture - income tax paid over the previous six years can be refunded, subject to certain conditions; the Revenue job assist scheme, RJA, which continues to be available to employers who employ an individual who has been unemployed for the previous 12 months. Employers may claim a double deduction when computing the profits of the trade or profession in respect of the first three years wages paid to qualifying employees. This double deduction may also be claimed in respect of the employers' PRSI contribution on such wages. Qualifying employees, in addition to their normal tax credits, can claim certain income deductions, including additional deductions for qualifying children for the three year period after taking up employment.
Other incentives focused on PRSI would primarily be the responsibility of my colleague, the Minister for Social Protection.
I welcome some of the measures the Minister has announced. He has said 70% of people are employed in the small business sector. That is very important and many are not aware of this fact. Despite some of the improvements and offers in respect of tax and PRSI and supports for small business, does the Minister accept that there are still huge problems in the small business sector, particularly in my constituency, Dublin Bay North? We see small businesses that are struggling with job losses, high rents, high rates and access to credit. All of these issues cause them major grief. Does the Minister have any other new creative idea to assist these businesses? Will he have a strong word with the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, on the issue? I feel very strongly that he needs to up his game on job creation and in supporting small businesses on the northside of Dublin. In the run-up to the budget will he consider retaining the VAT rate at 9% for restaurants because there is potential in the next 18 months to create in the region of 2,000 jobs? That is a practical measure to help small businesses.
Accessing credit is a problem for small businesses. We have strengthened both the banks and the credit union movement to enable them to provide credit, but, in addition, we have introduced the seed capital scheme and the bank guarantee scheme. We have also set up the Credit Control Office to enable small businesses whose banks have refused loans to appeal to the Director of Credit Control who is overturning the decision made in approximately 50% of the cases referred to him. We have also got the European Investment Bank to increase the amount of funds made available to Ireland from €250 million to over €600 million, much of which is being channelled through AIB and Bank of Ireland to the SME sector. There is approximately €200 million for each bank, specifically dedicated to providing funds for SMEs. We are doing a great deal, but it takes a long time to repair the damage caused by the disastrous collapse under the Fianna Fáil-Green Party Government. When GDP falls by almost 20%, one can see the damaging effect on business. I understand that around the country small businesses are picking up slowly and we hope we can sustain this. It is beginning to turn and I hope for the sake of all those who hung in and worked so hard that it will turn quickly for them and that their businesses will strengthen in the course of the summer.
Will the Minister consider retaining the 9% VAT rate for restaurants and the catering industry, as it will create another 1,800 jobs? I know from people working in that sector that they were delighted over the past year with the rate as it held them in there. There is potential to develop that aspect for further job creation.
That is an issue that we will consider in the context of the budget. It is far too early in the year to be talking about taxes.