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Financial Resolution No. 15: General (Resumed) (Continued)

Thursday, 6 December 2012

Dáil Éireann Debate
Vol. 785 No. 3

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(Speaker Continuing)

[The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny]  Important job announcements from both indigenous and foreign companies include the Kerry Group, Voxpro, Paddy Power, EA Games and Arvato Finance, to name but a few. These are all strong signs of confidence in Ireland and show that our considerable efforts to rebuild our reputation are bearing fruit. A significant amount of work remains to be done and the challenges before us are great.

We will continue to work to enhance our international reputation. Our EU Presidency, starting in January, will give us another opportunity to demonstrate our strengths as a nation. The one thing that no money can buy, however, is a reputation for hard work, creativity, skill and strength of character. The Government is not complacent about the challenge ahead. We acknowledge and fully understand the hard work of the Irish people to get us to this position. They know that there are no easy answers to restoring this country’s prosperity and future progress. I thank them for their indulgence, understanding and patience.

Despite the many changes made as a country, we continue to spend more than we collect in revenue. This has to be addressed. Fixing our national finances and putting them back on a sound footing is an absolute prerequisite for job creation and economic growth. It is absolutely necessary for confidence and certainty in our economy. To this end, the Government remains fully committed to the 2013 deficit ceiling of 7.5% of GDP and to reducing our deficit to below 3% of GDP by 2015. For 2012, we will be well within our deficit target agreed with the troika.

In May, the Irish people voted overwhelmingly to ratify the fiscal stability treaty. This much needed reform will ensure that governments now and in the future will manage the public finances appropriately and sustainably, so that what happened in the past will never recur. In recognition of mistakes made by previous governments, this budget has broadened the tax base. For too long, successive governments have relied on a very narrow source of revenues. The introduction of a fair, progressive and proportionate property tax will help us to address the budget deficit and will help to avoid additional taxes on income. Increasing income taxes at this time would only serve to destroy jobs, hit working families and affect our competitiveness. These families and their futures are the central focus of this budget.

As the Minister for Finance reiterated in his speech, in order to underpin the high levels of foreign direct investment and sustain indigenous enterprise and job creation, we will maintain Ireland’s 12.5% rate of corporation tax, which is a long-standing and core element of our enterprise strategy. Ireland’s corporation tax regime is transparent, easy to navigate and very close to the effective rate of 11.9%. This is to provide certainty to Irish businesses so that they can plan for the future with clarity and confidence, and thereby create more jobs.

Obviously, the Government is not satisfied with the high level of unemployment throughout the country. For this reason we have deliberately focussed on job creation and are committed to ensuring that our policies support strong and sustainable employment growth. We are committed to adding 100,000 jobs to the economy by 2016 and to have 2 million people in employment by 2020. To achieve this, as I have said on many occasions, I want Ireland to be recognised as the best small country in the world in which to do business by 2016.

Earlier this year we launched a comprehensive and detailed action plan on jobs. That action plan is about taking incremental and necessary steps right across Government to support enterprises to grow, create and retain jobs - quarter by quarter, reform by reform and step by step. In tandem with our action plan, we launched Pathways to Work, which is a fundamental reform of the way we support, engage with and treat jobseekers. The recently launched new, integrated service Intreo transforms the way we support jobseekers back into jobs, treating people looking for work as real contributors to our society and not as mere statistics. This new service is already working well, offering new hope and new opportunities for the future.

We have sought to maximise private investment in much needed infrastructure. Last year, we announced the establishment of NewERA and the Strategic Investment Fund. NewERA is a key commitment in the programme for Government and is central to the Government’s plans for job creation, investment and reforming how the Government manages its semi-State companies. In August, the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, published a national broadband plan which sets ambitious targets for the roll-out of high-speed broadband throughout the entire country. Some 200 secondary schools are currently being connected throughout the country as part of that plan, thus giving young people the opportunity to connect with the world.

To improve the availability of credit for business, the credit guarantee scheme commenced in October of this year. Initially, the scheme will facilitate up to €150 million of additional lending per annum to small and medium enterprises, in addition to the lending targets set for the pillar banks. It will provide a 75% State guarantee to banks against losses on qualifying loans to firms with growth and job creation potential. A microfinance scheme also opened for business in October. This will provide loans on a commercial basis for start-up businesses and micro-enterprises, which are very important for communities all over the country. Over a ten year period, it is expected that over €90 million in additional lending will be provided to 5,500 micro-enterprises with the potential to support the creation of an anticipated new 7,700 jobs. This drive is being led by the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry.

This budget is about building on the progress of the past 18 months to create more jobs and support small Irish businesses. It introduces further measures to support Irish business and sustain our economic recovery. As in our first budget, we have not raised income tax. We want to make work pay for families. We do not want to add extra taxes onto jobs and investment, which would be a step back on our path of national recovery.

Supporting small and medium-sized Irish businesses, which have a presence in every townland across the country, is absolutely essential if we are to get our country working again. Therein lies the key to Ireland’s future prosperity. The ten-point tax plan for small business is therefore a central feature of this year’s budget. The plan includes a series of measures that, taken together, will make a real difference to small and medium enterprises. New measures in that plan include, first, a 25% increase in the threshold for VAT cash receipts basis accounting, to improve cashflow for small and medium enterprises, which is so important and so often raised with us. The threshold will be increased from €1 million to €1.25 million. Second, a doubling of the amount of expenditure on research and development by small and medium enterprises eligible for tax credit, to support more innovation by businesses. The threshold has been increased from €100,000 to €200,000. I see evidence of this all over the country when I visit these small and medium enterprises. This issue means real progress for many such SMEs. Third, extending the employment investment and incentive scheme, which was due to run out in 2013, to 2020. This supports investment in businesses by providing tax relief of up to 41% on investments up to €10 million in companies. This extension gives clarity and definition to the horizon for planning and investment by these companies. Fourth, measures to reduce the burden of tax compliance for start-ups and small businesses, including an extension of the three-year corporation tax relief scheme and moves to look at ways of reducing costs of compliance for micro businesses. As Ministers are aware after engaging with so many businesses around the country, this is an issue that has been raised on many occasions. Fifth, an extension of the foreign earnings deduction scheme, to support companies putting personnel abroad - or “boots on the ground”, as they say - in eight more countries, which will help our agricultural sector in particular to export more. I am always enthused by the energy and ambition of so many young people to work abroad in promoting Ireland and selling the country's brand products. This extension of the foreign earnings deduction scheme to eight new countries offers opportunities for further trade, exports and therefore more jobs all over the country here in Ireland.

As we know, credit is the lifeblood of business and this is recognised in the budget.

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