Business organisation Ibec has called on the government to shift focus in Budget 2019 from attracting multinational investment towards new supports for indigenous business, which is suffering under what it says is an anti-competitive tax regime.

And its SME sub-group, the Small Firms Association, has demanded a national Small Business Strategy that would place a clear focus on the SME sector, which it pointed out comprises 98% of Irish businesses and employs half the private sector workforce.

Ibec president Edel Creely (pictured) said: “Ibec supports the broad fiscal approach set out by government but believes industrial, economic and fiscal policy needs to be refined and adjusted in ways that bolster the indigenous enterprise sector. 

“Brexit and competitiveness pressures will be particularly acute for indigenous business, so we are calling for a series of targeted measures in Budget 2019 to help achieve more balanced economic growth.

“Ireland’s broader investment tax environment for indigenous business is an outlier in its lack of attractiveness by international norms. We have the third highest capital gains tax rate in the OECD, a stamp duty regime on shares which is the highest in the world (twice that of the second highest) and an R&D tax credit which is far too complicated for smaller firms to engage with. 

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“This unfavourable treatment of investment by indigenous business cannot be allowed continue if we are serious about growing indigenous companies that can compete internationally.”

SFA assistant director Linda Barry added: “On the one hand, we need to make sure our economy is more resilient to external shocks. On the other, we have a situation where, even with a strongly growing economy, less than half of SFA members tell us that their businesses are growing.

“There is a single solution that would mitigate both these macro and micro challenges. We need a national Small Business Strategy, placing a clear focus on the 98% of businesses employing half the private sector workforce, which are the lifeblood of towns and villages around the country. It is time for a plan to boost the number and performance of small businesses. It would give these businesses a better chance of succeeding and provide Ireland with a more resilient indigenous enterprise base.”

The SFA went on to ask that all budgetary measures be assessed for their impact on small firms, and that no measures that impose additional costs on small companies should be introduced; that the self-employed Earned Income Tax Credit be brought to the same level as the PAYE tax credit; and that capital gains tax rates need to be reviewed, as “the 33% rate and the restrictive limit on Entrepreneur Relief is a poor reward for years and often decades of hard work to build a business”.

Ibec’s suggested suite of budget measures includes:

• A meaningful employee stock ownership scheme that helps indigenous SMEs attract and retain talent
• Capital gains tax to be significantly overhauled to bring it into line with the wider corporate tax regime for business investments
• SMEs to be encouraged to invest in robotics and automation to drive productive growth
• The Employment Investment and Incentive Scheme to be amended to make it a more effective financing option for SMEs
• A radical fiscal response to address the crisis in higher education funding.