OWNERS of small firms should allow staff to take a stake in their business as an alternative to getting credit from the banks, a government TD said yesterday.
Fine Gael's Noel Harrington said he favoured the introduction of a tax deductible scheme to allow employees to invest in the companies they work in, in an effort to ease the credit problems for cash-strapped firms.
Referring to this year's Credit Guarantee Bill, the Cork South West TD said Ireland was "short of capital" and needed to look seriously at alternatives for companies that could not get financing from traditional sources.
"Tax concessions exist for employee share options; so why not offer tax concessions or reliefs to employees of small- and medium-sized enterprises who want to invest in the companies in which they work?" he asked.
"If the option was available for an employee to invest in their company, while availing of a tax benefit as if they were investing in a pension scheme, it would present a situation that was mutually beneficial for both the employer and employee, freeing up capital for the further expansion and development of the business."
ISME chief executive Mark Fielding said the idea was one that could be looked at, but warned about the pitfalls of having staff who have a share in a small company.
"There could be some issues around how an owner can deal with an employee's performance if that employee owns part of the company, but if the banks were doing their job by lending, this wouldn't be an issue," he said.