Tax reform needed to encourage entrepreneurship, says Ibec

Economy, Finance | Mon 11 Jan | Author – Business & Finance
taxes eFile989

The next government will need to introduce major tax reform if it wants to encourage more people to start their own companies, according to Ibec, the group that represents Irish business.

Publishing a detailed set of policy recommendations on entrepreneurship in advance of the election, Ibec said claims by the major political parties to support small business and start-ups now need to be matched with firm manifesto commitments.

Ireland continues to excel when it comes to attracting multinational and Ibec believes this focus now needs to be applied to supporting indigenous firms.

Indigenous firms account for only 43% of GDP, 36% of business investment, 25% of our corporation tax and about 15% of our exports, despite making up 98% of the enterprise base.

Tax reform has a big role to play in shifting the balance. Ibec is calling for the income tax system to treat the self-employed the same as PAYE workers, tax incentives to encourage investment in Irish companies and a simplified R&D tax credit system.

In advance of the upcoming general election, Ibec with Amárach Research looked at how people felt about a government’s experience on business issues and about their own attitude to business and entrepreneurship.

The overwhelming majority (77%) said government should have a minimum number of people with business experience sitting at the cabinet table.

Gerard Brady, senior economist, Ibec, said: “It has become easier to start a business in recent years, but it remains difficult to grow and scale a business. What we now need is concerted, targeted support to make it easier and more financially attractive to grow new indigenous business.

“Between 2008 and 2012 the total number of private sector employees fell by 264,000, however companies trading for less than five years created 106,000 net new jobs. The important role of these firms is not adequately reflected in the tax system. Improvements made to the tax treatment of entrepreneurs in Budget 2016 were important, but were only a start. All political parties now need to match the rhetoric on supporting entrepreneurship with concrete manifesto commitments.”

Photo: eFile989