Wednesday 18 October 2017

Credit for farmers and tax breaks in new bid to beat Brexit

Agriculture Minister Michael Creed had a budget boost. Photo: Steve Humphreys
Agriculture Minister Michael Creed had a budget boost. Photo: Steve Humphreys

Kevin Doyle and Niall O'Connor

Tax breaks for start-up companies and a large increase in funding for the agri-food sector are key parts of the Budget plan to battle Brexit.

A series of ministers will announce initiatives today specially aimed at 'Brexit-proofing' Ireland in the years ahead.

Finance Minister Michael Noonan will tell the Dáil that the UK's decision to leave the European Union has presented huge challenges for the Irish economy.

However, he will argue that the Government is well prepared with a plan to attract entrepreneurs and highly skilled workers.

As part of the main package of measures, Jobs Minister Mary Mitchell O'Connor will halve the rate of Capital Gains Tax (CGT) on start-up companies to 10pc.

She will also raise the threshold at which companies would pay CGT to €10m, in order to bring Ireland in line with the UK.

At present it is estimated that the founders of a start-up in Dublin would pay around €4m in tax if they sold their enterprise for €10m.

Deterrent

Sources told the Irish Independent that this has proven "a major deterrent" to entrepreneurs, which must be addressed quickly in light of Brexit.

Proposals to offer a special tax rate to returning emigrants are off the table. However, there will be tax incentives for graduates who purchase company shares.

At present, workers who purchase shares in their company pay tax immediately.

Under the new measures, workers will pay no tax until they divest themselves of the shares.

This will bring Ireland in line with arrangements in place in the UK.

Enterprise Ireland and the IDA are to see their funding increased "substantially" in order to live up to the Government's commitment to create 200,000 jobs, including 135,000 outside of Dublin.

A source said it was too early to introduce specific measures to help exporters feeling the effects of weak Sterling.

However, amid particular concerns about the impact on the tourism sector, the special 9pc VAT rate for hotels and restaurants is expected to be maintained.

The agriculture sector is also under threat from Brexit, and Minister Michael Creed will announce a series of measures to help farmers.

The Irish Independent understands that Mr Creed has been given a €200m boost to his overall budget, bringing it to €1.3bn.

Bord Bia will be at the forefront of a marketing push, and has been allocated an additional 10pc on top of its €109m.

Farmers will also benefit from the increased allocations, with the well flagged Sheep Welfare Scheme (SWS) aiming to deliver €25m through a €10 per ewe payment, which is linked to farmers meeting a minimum number of animal welfare criteria.

The final details on the exact shape of a scheme to give farmers cheap credit is also being devised, but the exact details have to be ironed out.

Minister Creed wants to roll out a loan scheme that caters for the needs of not just hard-pressed dairy farmers but also other livestock farmers and tillage growers, who have struggled with the 2016 harvest.

Details of the Brexit plan will come just a day ahead of a visit to Dublin by the man Brussels has charged with negotiation on behalf of the European Union with the UK.

Michel Barnier will meet Taoiseach Enda Kenny and senior officials.

Irish Independent

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