Business Irish

Friday 24 January 2020

Here's some really smart ideas to get growth going in the Budget

Broadband, a VAT cut, less red tape, R&D and e-learning top the wish list, write Nick Webb, Roisin Burke and John Reynolds

Stan McCarthy: CEO of Kerry Group;"Kerry has stated for some time now the need to continue to invest and support indigenous businesses and to keep exports growing for the country. It's part of our mission statement -- essentially it is our mission statement," says the Kerry Group boss.

"Agriculture and food are very close to Kerry, so in terms of the Budget the issue of allocation of funds and targets that are currently in place for agriculture, it's important that those in place aren't interrupted.

"While the future of growth in Ireland is obviously going to be driven by GDP, you also need local business growth as well. Entrepreneurship needs to be nurtured in some way in this Budget that would grow GNP and employment -- the talent that is out there.

"You can architect initiatives that can be very supportive to help development of small companies, such as in the whole area of micro-financing. This issue has been discussed by Government, it came up at a forum in Dublin recently, and the Taoiseach has voiced his support. We'd like to see that support happen, and sooner rather than later.

"Innovation on the food side has lost a little direction in the last decade, but the awareness is now there that it is critical to the future of the country.

"Collaboration with the international offices of the Government [such as Enterprise Ireland] in opening new offices overseas is always important to us, and hopefully that will continue to be available.

"Whatever happens in the Budget it is important that R&D is very high on the agenda, so anything that affects third level or research level innovation should be avoided.

"The VAT move, while it doesn't affect food and clothing and the services area, is a bit extreme. I'm not sure what the terms are, but hopefully it won't be a permanent move, just for a period of time."

Aongus Hegarty

General Manager at Dell

"While I understand the logic for the postponement of many of the planned capital projects, it is important that we continue to focus on investments in broadband and the continuation of the National Broadband Scheme," according to Dell's Aongus Hegarty.

"As an 'Innovation Nation', having the right infrastructure is critical and a reliable national network is the centrepiece of this. This will, in time, facilitate the local indigenous community as well as act as an incentive for ongoing FDI decision-making."

"I know that a significant proportion of the public expenditure each year goes into education but this is an area where as much investment as possible needs to be retained. We have no hope of returning to a period of long-term sustainable growth if we don't invest in the children and young people currently in school.

"Having IT skills is now as important as the ability to read and write, so a focus on equipping schools with IT equipment and ensuring that the teachers have the ability to use technology in an integrated manner in the classroom is very important for the future health of the economy."

Liam Shanahan

Green energy investor

"What we have to see is some sort of tax certainty in the Irish economy," according to the former Shanahan Engineering owner. At the moment there is so little.

"What business hates even more than taxes is uncertainty -- it's even more cancerous than high taxes. People will not move forward with investment here in a meaningful way until that is reduced.

"I would like to see four years' certainty on taxes and regulation provided in this Budget.

"We have to either cut our public sector costs or increase our tax base, one or the other. My view is that Croke Park is anathema at the moment to economic recovery.

"We also have to have social welfare reform. It's unpalatable, but it's absolutely ridiculous that someone like me gets child benefit. But it's equally ridiculous that somebody earning €20,000 a year is as well-off on the dole in certain circumstances.

"We do need to look at water charges, we should be paying for our water.

"And we need to widen the tax bands at the bottom as well as at the top -- everybody's got to pitch in.

"I think some sort of tax on expensive goods could be considered, such as on expensive cars and pricey consumer items. Tax that instead of people's homes, people's ability to clothe and educate themselves.

"I would like to see student fees. Again, it's ridiculous that a guy like me pays so little.

"We need to find a way of tax incentivising export sales out of this country. For example, if you are working for a company in exports and you spend 50 per cent of your time overseas, you should get a tax break."

Simon Elliott

MD of Volkswagen Ireland

"What the Government should do to gain the most amount of money in order to help re-float the market is to encourage new car sales and that would mean holding off on any VAT increase until at least February to allow a fast start for sales. Also, there must be a reappraisal of the existing registration system, which leaves the market so front-loaded," according to Volkswagen boss Simon Elliott.

"A huge majority of car sales occur in the first three months of the year, making it difficult for businesses to operate all-year round and it also makes launching new product later in the year nigh impossible," he adds. By introducing two registration periods they would create two buying peaks, which in simple terms would be good for the government coffers.

"Also, there is an opportunity to gain revenue from allowing motorists to choose a registration specific to their county. County pride could equate to much-needed government funds by allowing buyers to change their registration to their own county."

Robert Finnegan

CEO at 3Mobile

"Many of the key components of this year's Budget have already been flagged -- what we can be certain about is that €3.8bn will be taken out of the Irish economy through a mixture of spending cuts and rises in existing and new taxes," said Finnegan.

"While the Government doesn't have a lot of choice in many of these decisions, the absence of any growth stimulus is of major concern, but perhaps Mr Noonan will surprise us all next Tuesday.

"I would have liked to see the Government strike a blow for consumers by actually cutting the VAT rate to 20 per cent, thereby increasing consumer spending, creating jobs and adding to the Government's coffers all at the same time and also deliver on the long-awaited legislation regarding upward-only rent reviews, which will also help protect jobs."

Tony Garry

CEO of Davy stockbrokers

"The Government should resist the temptation to engage in job creation schemes which may be well received, but are unlikely to have a material effect on employment. Any jobs initiative should be subjected to rigorous cost/benefit analysis -- and if no significant impact on employment can be found, it should be abandoned," said Davy's Tony Garry.

"We are concerned about the continuing attacks on private sector pension benefits. Taxing pensions at a higher rate than the relief they obtained on the contributions invested is a retrograde step that will exacerbate our pensions crisis," he warns.

"Providing pension holders with limited access to their tax-free lump sum prior to retirement could have a transformative impact on consumer sentiment and purchasing power. Such a move would enable parents to assist children with equity for house purposes or, indeed, to repay short-term debts of their own."

Joe Carr

Managing partner, Mazars

Carr believes that attracting talent to Ireland must be a key objective. High personal tax rates make this difficult and reforming the inpatriate regime by excluding a slice of incoming workers' remuneration would be an incentive to bring people into Ireland.

"It could be extended to non-resident Irish people too in order to bring them home. A number of countries, including France, are looking at similar schemes."

Dividends on patent incomes could be brought down to 12.5 per cent for individuals. He also thinks that removing the 2003 threshold on R&D spending would boost the 'smart' sector.

"It's not costly. We'd be setting our stall out for innovation and for people to come here," he suggests. "The commercial property market could be helped by cutting the rate of stamp duty from 6 per cent to 4 percent in order to allow transactions to happen.

"A further move to restore the tax relief on interest for money invested in entrepreneurs' businesses would have a major effect on the SME sector. People could introduce private money into their businesses," according to Carr.

John Concannon,

MD of JFC Manufacturing and 'Secret Millionaire' star

"The economy needs a boost in consumer spending, but the VAT increase will militate against that and may well reduce overall spend," says the boss and founder of the Co Galway company which makes plastic products for agriculture and industry.

"Tax on fuel would hit both production and transport costs. Export-led expansion is the most realistic recovery path, so a tax break on fuel used in the export sector is one possibility.

"We need to invest more cash in the Enterprise Boards that are at the coalface of job creation and this is vital. The boards could create thousands of jobs if they had the cash, and Ireland cannot afford 400,000 people on the dole.

"We need to create more exports and Irish companies need more backing for trade shows and export-led projects. A small island will not survive without exports and we need confidence that Enterprise Ireland will back good companies with export potential.

John McGuire

Entrepreneur and TV personality

"I know the Government made an announcement some days ago about measures to help grow small business, but this isn't going to make much difference if businesses continue to be hamstrung by bureaucracy," said McGuire, who is MD of First Credit and chairman of Quote Devil and Pembroke insurance companies and Dax restaurant.

"Anything in the Budget that reduces the cost of regulation and licensing would be welcome."

"We've got four very successful businesses but we struggle with red tape. For the restaurant business we need four different licences for four different types of liquor -- one for cider, one for beer, one for spirits and one for wine. We often find ourselves dealing with civil servants who are very old school and work very slowly."

Paddy Dunning

Owner of the National Wax Museum and Grouse Lodge music studios

"The current environment doesn't incentivise job creation and I feel some tax incentives would greatly increase employment throughout the country.

"I think funding for cultural and creative events like the Festival of the Fires, Forbidden Fruit and Electric Picnic targeted at tempting Irish people to take their holidays in Ireland would greatly benefit the economy.

"People receiving state pensions of over €100,000 should be taxed further, along with a percentage of the IMF bailout money being allocated for start-ups and job creation, which could be distributed through the County Enterprise Boards and Enterprise Ireland.

"If the Government put as much effort into creating jobs as opposed to looking for areas they can save money I feel it would greatly improve economic conditions."

John Corcoran

Owner Korky's shoe shops

"Anything that reduces retailers' cost bases in the Budget will be welcome. We pay €200,000 a year in rates to Dublin City Council. There's a 1.7 per cent rate cut coming, which is welcome, but it's a relatively tiny amount.

"Retail employs more than 250,000 people and the higher VAT threatens jobs and how our revenue and wages we pay trickles down through the economy. Perhaps the Government could try reducing VAT and see what effect it had after six months."

Sean Rowland

President, Hibernia College

"I'd like to see incentives in the Budget for the creation of new institutional structures and initiatives to allow more students to receive education in a financially efficient manner.

"We need to introduce transparent accountability in education spending. We also need to find a way to deliver modern, evidence-based teaching and cutting-edge technology to our growing student numbers."

Tom Arnold

CEO, Concern Worldwide

"We would like in particular to know that the Government will continue to protect the target of contributing 0.7 per cent of income to overseas aid. As it is, this amount has shrunk dramatically as the country's income has declined.

"It actually makes sense reputationally for this country to be seen to invest in developing countries. And for the corporate sector, these are the emerging markets of the future and potentially important for export and investment.

"Kerry Group is contributing €1.25m to the RAIN research initiative in partnership with Concern, aimed at sustainable solutions to undernutrition in children in Uganda and Zambia. We want to see the Government continue to play its part."

Julie O'Neill

General Manager, Gilead Sciences

"In general, the Budget must encourage and not discourage economic activity.

"More needs to be done to ensure that Ireland stays ahead of other countries competing for investment. We are in danger of rapidly falling behind the competition.

"We need to enhance our taxation regime for intellectual property and to become more effective in attracting the specialist talent needed to build global business units and market headquarters here, while improving our R&D tax credit offering.

Alf Smiddy

Former Beamish boss now business adviser

"The Government should raise at least €2bn from selling some semi-states.

"While the tax base needs widening, certain SMEs should be exempt from VAT increases, such as those selling Irish arts and crafts.

"Tax should be raised for very high earners and for pensions over €100k. All benefits paid to them should be eliminated or taxed.

"Public sector pay increments should be abolished and all inefficiencies tackled. Multinationals and tourism are the best targets for stimulating jobs and growth."

Sunday Indo Business

Also in Business