Business group Dublin Chamber has called on the Government to reduce Capital Gains Tax (CGT) to 20% from 33% for investments in indigenous SMEs in Budget 2021. 

The Chamber represents businesses throughout the Greater Dublin Area.

In its Budget submission, it said that a "bold new plan" is needed to boost investment in Irish enterprise as Ireland tries to reboot its economy after Covid-19 and as businesses face the prospect of a disorderly Brexit. 

The Chamber argues that Ireland should introduce a new 20% rate of CGT on investments in businesses that are not listed on any stock exchange.

It added that the move is needed to begin addressing the growing investment gap in the Irish SME sector which now faces a €15 billion revenue shortfall.

"Introducing a targeted CGT reduction like this would send a signal that the Government is serious about growing our SME sector", Dublin Chamber CEO Mary Rose Burke said. 

Ms Burke said the move would cost less than the 2% VAT cut announced in the July Jobs Stimulus and would help to stimulate economic activity. 

"Ireland's SME sector has been particularly badly hit by the Covid-19 pandemic, and SMEs will also be the most exposed if there is disruption of our trade links with the UK. Now more than ever, the Government needs to show real ambition for Irish enterprise," she added.

The Dublin Chamber CEO said the tax system basically incentivises passive investment in large blue chip firms over investment in higher-risk Irish SMEs by charging the same CGT rate of 33% on both - the third highest rate in Europe.

"This needs to be addressed if the Government is truly serious about supporting small and medium sized businesses in Ireland. It is high time that the tax rate is reflective of the level of risk taken and the contribution of an investment to the future of the Irish economy," Mary Rose Burke said.

She said Dublin Chamber's proposed 20% CGT rate for SMEs would still be higher than the 10% rate that exists in the UK, but taken together with our other proposals, it would provide a major boost in Irish business investment. 

In its Budget submission, Dublin Chamber also called on the Government to bring forward the delivery timeline for major public transport projects, including MetroLink, the Dart+ scheme, BusConnects and Dart Underground. 

It also wants vital investments to be made in essential services in the Dublin region, including broadband, to help with the transition to increased remote working, and the delivery of the Eastern and Midland Region Water Supply Project, to stave off the region's water supply issues.