Business group Ibec has called for more supports for entrepreneurs, and for money from the Rainy Day Fund to be diverted towards higher education. In its pre-budget submission, Ibec has called for foreign direct investment to be further encouraged through tax allowances for data centres and robotics, while it also wants average earners to be taken out of the higher income tax band.
Fergal O'Brien, Director of Policy at Ibec, said the Government is broadly correct in its attitude towards Budget 2019. "The approach Government has outlined for the overall budget makes sense as we don't need an excessively expansionary budget," he said. "It makes sense to be prudent right now, and not to add to the competitiveness pressures we're seeing emerging in the economy right now", he added.
But certain areas need to be given particular focus and funding and Ibec feels the higher education sector is one of those areas. "One of the most important features that the business community has identified is that we're falling rapidly down the rankings in terms of our higher education sector," he said. "We've seen a drop of about 50% in the funding per student over the last decade, what we're suggesting today is that the money that's ring-fenced for the Rainy Day Fund should be put into the higher education sector," he stated.
That would see €250m being diverted from a fund that is just being established - though Ibec argues that it would provide little protection in the event of a crash and, so, would be better invested in the economy.
Elsewhere Ibec also wants a number of measures introduced to support enterpreneurs - in particular a special capital gains tax rate of 12.5%. "We need to achieve a step change in terms of how we're supporting our indigenous enterprise sector," he said. "We need to do more to help entrepreneurs to start, grow and ultimately sell their businesses." A simplified capital gains structure would help that, Mr O'Brien said, with a cut likely costing €50-60m in its first year. However over time, he argues it would improve the business environment and encourage tax revenues as a result.
Ibec also wants to see average income earners taken out of the higher rate of tax, while it has urged allowances to be introduced to encourage data centre construction and the use of robotics by companies here.
None of this would over-stimulate the economy, Mr O'Brien said, but would instead help encourage sustainable activity in the country. "It's about reforming the economy, it's about making sure we're competitive, it's about ensuring start-ups are not migrating to the UK because they want to continue to service the UK market," he said.
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