Budget brainwaves to help Angela and Michael kickstart our economy
Published 02/12/2012 | 05:00
Some of Ireland's smartest entrepreneurs and shrewdest business leaders have put their minds to the task of coming up with one good suggestion each for this week's Budget that could help to get our country moving again.
MICHAEL Noonan and his mandarins are clearly utterly bereft of any smart ideas for Das Budget on Wednesday. The only thing on their minds is to cut and cut some more. More tired thinking from an already jaded government.
We asked some of the country's smartest entrepreneurs and shrewdest business leaders to each come up with one good idea for how to kickstart the dying economy in the upcoming Budget. Revolutionary ideas such as a flat tax on everything to a new deal for start-ups or further incentives for trading with the BRIC countries, Brazil, Russia, India and China, are among the fresh approaches suggested.
Mainstream Renewable Power founder, who sold Airtricity for €1.1bn in 2007.
"It's vital that we maintain a favourable tax proposition if we want attract foreign manufacturers to locate here. In Mainstream Renewable Power, we're working on bringing 40,000 new manufacturing jobs to Ireland.
"Today, Germany employs eight people for every megawatt of wind energy installed – Ireland employs just one. Our plan is to change that by bringing the manufacturing jobs here," O'Connor says.
"Our Energy Bridge project will see 5,000 megawatts of surplus wind power being built here in Ireland and exported to the UK from 2017. If we want to see this scale of new employment we have to make sure the tax regime is attractive and the employment-attracting agencies focus on green energy."
"While any meaningful recovery must include a dramatic revival of the indigenous sector, there is no getting away from the structural imperative to increase the long-term flow of foreign income into the economy in order to grow national income, create employment and balance the books in a sustainable way," says Murtagh.
"The introduction last year of a Foreign Earnings Deduction to support exports by aiding companies to expand in the so-called BRIC countries was a welcome move. We would like to see a continuation of this initiative and perhaps its extension to other markets such as North America, the Middle East and Africa. Networking and the sourcing of new markets takes resources and patience. We will only see the fruits of this hard work over an extended period."
Vice President Global Operations in EMEA for PayPal
"A significant opportunity exists to develop our foreign language capabilities. This would create additional employment opportunities and add to the country's attractiveness as a good place to do business. Irish graduates do not have the language capabilities to support the current demand," says Phelan.
"On a practical level, supporting the teaching of foreign languages in our primary school curriculum should be strongly considered. Partnerships between industry and third-level institutions also need to be supported. It is a national deficiency that we need to tackle."
Internet visionary and entrepreneur, who sold WRI for over €200m
"Entrepreneurs generate employment, saving on dole and generating tax income. They usually work long hours at below market rates to build their businesses. They are the lifeblood of the economy we should be trying to build," according to Nolan.
"By allowing founders additional tax relief for their first two years, we encourage more risk takers, and require them to have less funds in order to get things moving. Later, they should be allowed sell a portion of their shareholding at reduced capital gains levels, thereby encouraging them to build even bigger businesses having de-risked to some degree.
"I have first-hand experience of similar schemes in operation both in the UK and internationally, and the results have been very positive for employment and overall tax take."
Founder of broadband innovator Rivada and Euro cage rattler
"OK, easy, flat tax. They won't do it but it would deliver a shot in the arm to the domestic economy and inward investment like nothing else can, I expect it would also increase the overall tax take," according to the Galway-based entrepreneur.
"We would be the first English speaking nation to do it and I fully expect it would trigger a positive trend. Nothing will say 'Ireland really gets it' to international investors like a flat tax regime," he says.
Ganley believes the proposal could work if rates were above the existing 12.5 per cent floor for corporate tax.
"I'd make the rate a bit higher, say 14 per cent or 15 per cent with no exceptions and no loopholes, although you could still have a tax-free minimum income for low earners," Ganley says.
Group managing director of Glanbia
"Prioritising and supporting growth potential in the agricultural and food sector must be a priority for Government. Approximately 80 per cent of the inputs to the sector come from the Irish economy, which gives a huge 'trickle down' effect that creates local jobs and services," according to the Glanbia chief.
"The agricultural and food sector is on the cusp of a huge acceleration of growth due to the abolition of milk quotas in 2015. Long term capital funding will be a key issue for new processing assets. After 31 years of output restriction, new infrastructure to exploit expansion must be built with returns released over a long period. Such funding needs are similar to the European Investment Bank mandate and I believe a case can be made for such funding into long term growth sectors such as dairy," he argues.
Chief executive of UPC, Ireland's biggest cable TV, broadband and telephony firm
"I would like to see incentives for SMEs transacting online. Today a significant proportion of online purchases are to UK and US websites. If this trend continues, we will lose real economic value out of the Irish economy.
"To reverse this trend and maintain Irish jobs, we need to encourage businesses to get online and transact online," Strong says.
"We recently published a report, which found that most adults using international websites were not aware of an Irish alternative but over six in 10 of them would buy from an Irish website if they knew about it. This comprehensive report reveals the size of the economic prize for Ireland if we get our digital strategy right.
"These incentives could be augmented by an internship programme to place web- and tech-savvy graduates with companies to help them."
Dublin footballer and sports agent, Director of Legacy Sports & Entertainment Consultants
"The role of sport in an economy is huge and needs to be recognised. The Government should focus on retaining the tax-incentive scheme which provides sports persons relief on retirement," according to Brogan.
"This relief allows a deduction from earnings equal to 40 per cent from participation in sport for up to 10 tax years for which the sports person was resident in Ireland. The purpose of the relief is to recognise the short earning career of sportspersons.
"This is a vital tax incentive in the context of keeping Irish sportspeople playing sports such as rugby and soccer in Ireland rather than moving abroad," Brogan says.
Aviation entrepreneur and chairman of Dublin Aerospace
"We've got fantastic infrastructure here now, broadband speeds are quite good and the education system is good," according to McCarthy.
"However, we seem to be importing too many skilled people for our growth sector. I saw a figure of up to 80 per cent for companies like the Googles and Facebooks. I think there should be compulsory modules in third level, where students have to develop job skills that would aid them to take an interim role should they need to. Any young person coming out of college doing something like architecture should also be able to do something like write an app for an iPad. I think there's a mismatch between the output from universities and the jobs market."
Chief executive of Musgrave
"The Budget needs to do as much as possible to assist with creating and maintaining jobs and address the issue of business costs," Martin says.
"With the domestic economy so challenged, our retail partners are confronted with issues which affect their ability to develop their businesses. In particular, employment costs comprise the second biggest cost to retailers after the cost of product and comprise 70 per cent of total overheads. As a consequence, any adverse change to the cost of people has a significant impact.
"The proposal to introduce mandatory sick pay is of concern to us and our retail partners. It would constitute an additional tax on employment. Rather than taxing employment, we contend that Government should be doing all it can to support the private business sector in the generation and retention of employment," he says.
CEO of Volkswagen Group Ireland
"Since I arrived in Ireland, just over a year ago, I have been shocked at just how much the Government here appears to pillage the motorist rather than actually seek to stimulate the industry," Elliott says.
"Rather than increase Vehicle Registration Tax on new cars, I'd like to see the Government offer new car buyers a holiday from VRT and help to stimulate the market for new cars. This would secure jobs, it would take older cars off our roads and it would reintroduce confidence. I'd also like to see a second registration plate introduced in July to stimulate the second half of the year for car sales," Elliott suggests.
IBM Ireland chief and President of the American Chamber of Commerce Ireland
"Ireland has to remain attractive for both capital investment and talent. It needs key people to choose to stay and locate here, particularly as we address available skills in our organisations," O'Neill says.
"The personal taxation arrangements here have to be competitive with offerings elsewhere. Ireland cannot afford to price itself out of the market. Increases in higher direct or indirect marginal taxes are a tax on talent. It is critical that there are no upward changes made to income tax, PRSI and USC in 2013.
"In particular, employers' PRSI is a direct cost on employing staff and there should be no temptation to increase this cost any further. To do so would, we believe, have a seriously detrimental effect on the ability of American Chamber member companies to hire and retain staff," he says.
CEO of Netwatch which employs 130 people in Carlow and has offices in the UK and USA
Walsh believes that there must be a focus on creating jobs and protecting existing employment.
"Protecting jobs means steering away from issues such as forcing employers to pay mandatory sick pay or increasing employers' PRSI, which would place a further strain on employers, businesses and jobs," Walsh says.
"In order to encourage entrepreneurship and job creation, there needs to be significant rule changes in regards to start-ups. Entrepreneurs must be allowed to make voluntary PRSI contributions. This initiative would remove the fear barrier for many would-be entrepreneurs and together with a tax incentive for investments in start-ups, could provide much-needed growth in the current jobs market."
Games industry entrepreneur, sold Demonware to Activision in 2007. Now CEO Scalefront
"Lower tax burden on young companies, cognisant of the fact that they are not yet profitable and don't benefit from the low corp income tax rate," he says.
"The largest cost for start-ups is salaries. Providing an employers' PRSI break for the first few years would have a huge impact. Creating a start-up employee tax credit would also permit start-ups to pay fair take-home salaries with less financial pain.
"Introduce a new procurement rule that requires a small fraction of public spending on IT to be preferentially spent with small indigenous companies," Blanchfield says.
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