Monday 23 April 2018

Tax system treats family businesses unfairly, claims ex-Musgrave head

Retail veteran Mackeown criticises Government photo ops in speech in front of Taoiseach

Hugh Mackeown said that both the government and media had to do more to promote Irish enterprises
Hugh Mackeown said that both the government and media had to do more to promote Irish enterprises
Gavin McLoughlin

Gavin McLoughlin

Ireland's tax system militates against Irish family businesses in favour of multinationals, according to the man who transformed the family-owned Musgrave group into an Irish food distribution and retail giant.

In a hard-hitting speech delivered to an audience that included Taoiseach Enda Kenny, Hugh Mackeown said a shift is needed across government and media as to the balance between promoting native and foreign enterprises here.

"What kind of a message does it send to Irish businesses when our Minister for Finance goes to Shannon to meet Mr Trump, who plans to invest in an existing golf club?

"No Musgrave CEO has been met by a politician off a plane, or anything else, in 140 years," said Mr Mackeown, who served as managing director and CEO of Musgrave before retiring as chairman five years ago.

When Mr Mackeown joined the company in 1965 it had a turnover of £7m. By 2007 turnover had almost reached €5bn. Musgrave is the company behind SuperValu and Centra.

"Our tax system militates strongly against long-lasting family enterprises, to a greater extent than our UK neighbours," he said.

"Many will probably ask, 'does that matter?' It most certainly does matter, particularly when you think of the present political driver to boost our economy by encouraging entrepreneurship amongst smaller undertakings and start-ups. I would suspect that the majority of these will be family businesses.

"Between SuperValu and Centra we have over 600 outlets, 95pc of them family owned, and most of them in towns and villages in rural areas. Many such rural towns are struggling to maintain viability. Which type of retail outlet is going to do most to help?

"As far as foreign-owned chains are concerned, their profits have the advantage of the 12.5pc corporation tax, and are then distributed to shareholders outside Ireland, where the rates of personal tax are probably lower because of higher corporation tax.

"None of the foreign chain's profit is subject to the high Irish rate of personal taxation, so the overall Irish tax return is 12.5pc.

"The communities are losing and the State is losing, for evermore. At times I get the impression that politicians and media have an unthinking obsession with overseas investment, to the detriment of Irish-owned enterprises.

"Of course, we need both, only a fool would think otherwise. But in recent plans for recovery it has emerged there is a strong need for Irish-based innovation and developments."

Mr Mackeown was speaking after being awarded an 'Outstanding Achievement in Business' award by the Cork Chamber.

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