BUDGET 2019 PRIORITIES & PRELIMINARY RECOMMENDATIONS - PRESENTATION TO OIREACHTAS COMMITTEE ON BUDGETARY OVERSIGHT
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BUDGET 2019
PRIORITIES & PRELIMINARY
RECOMMENDATIONS
PRESENTATION TO OIREACHTAS COMMITTEE ON BUDGETARY OVERSIGHT
19 JUNE 2018
DUBLIN CHAMBER
OUR MISSION
Helping businesses succeed
in a successful Dublin
OUR VISION
Dublin will be globally renowned for its
economic competitiveness and quality of life
POLICY AGENDA Business Competitiveness Entrepreneurship and Enterprise National & Regional Development Infrastructure & Housing Urban Quality of Life Fiscal Priorities
48-PAGE ‘VISION’ REPORT & CGI WALKTHROUGH OF ‘DUBLIN 2050’
POLICY PROCESS
1300
Members
Policy
Council
Budget & Tax
Taskforce
CONTEXT FOR BUDGET 2019 Headline indicators are positive. • 5.7% economic growth this year (EU Commission) • 3.9% growth in domestic demand in 2017 (OECD) • Debt-GDP ratio down to 68% • Low unemployment c. 6%
CONTEXT FOR BUDGET 2019 But the economic situation is precarious. Ireland has underlying weaknesses • Real Govt. debt level is high (c. 100% GNI* and c. 264% Revenue) • Inadequate economic infrastructure • Strong reliance on FDI tax receipts • Low productivity in indigenous sector Ireland is vulnerable to external shocks • UK exit from the European Union • International downturns • Trade wars • Restructuring of major global firms
BUSINESS FEEDBACK
ON FISCAL PRIORITIES
4% 7%
22%
4%
48%
15%
Dublin Chamber Business Risk Outlook Q2 2018STRENGTHEN THE FUNDAMENTALS Invest in Ireland’s Infrastructure Measures to prioritise productive investment Grow Ireland’s Businesses Measures to encourage entrepreneurship and indigenous enterprise Invest in Ireland’s Human Capital Measures to attract, retain & develop talent
INFRASTRUCTURE
What is the biggest problem facing Dublin's
competitiveness?
6%
7%
22%
Bad planning
Inadequate infrastructure
Poor governance
Ineffective promotion of
Dublin
65%INFRASTRUCTURE
General Government Gross Fixed Capital Formation 2001-2015 (Eurostat)
6%
5%
Per cent of Gross Domestic Product
4%
3%
2%
1%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Belgium Denmark European Union France Germany
Ireland Netherlands Sweden United KingdomINFRASTRUCTURE
Average Annual Capital Spending per capita 2009-2016 Includes:
Kilkenny 1) Income Received by
Leitrim Local Authorities for
Westmeath Capital Spending in Six
Roscommon Budget Service
Mayo Categories including
transport (37%), housing
Kildare
and urban regeneration
Longford
programmes (34%) and
Laois
general purpose grants
Monaghan
(16%);
Average
2) Allocations from
Tipperary
Transport Infrastructure
Clare
Ireland for National
Kerry Roads in each county.
Galway
Waterford Does not include:
Limerick
Wexford 1) One-Off Capital Spending
Donegal on National Infrastructure
Offaly Projects (such as Hospital
Cavan Buildings and Primary
Cork Care Centres) that is
Meath difficult to geographically
Wicklow localise and mainly takes
Louth the form of availability
Dublin payments on PPPs.
Carlow
€ - 100 200 300 400 500 600 700 8001. INVEST IN IRELAND’S INFRASTRUCTURE
Recommendations
Key Priority:
Budget 2019 must meet the
Government’s fiscal commitments as
outlined in the NDP. This will require
Ensure stable and €7.3 billion in gross voted exchequer
funding for public capital expenditure,
accounting for 3.5% of projected Gross
speedy delivery of the National Income*.
Prioritise projects serving the Greater
National Development Dublin Area – MetroLink, DART
Expansion, BusConnects, Shannon
Plan. water pipeline
Use the Rainy Day Fund as an
insurance policy for the National
Development Plan.
Ring-fence revenue buoyancy for
investment in productive infrastructure.BUSINESSES
19%
81%IRELAND VS. UK
Ireland UK / NI
(€1.1333 per £1 – 10/05/18 – www.ft.com)
(Budget 2018) (Budget Spring ‘18)
Investment in Critical Infrastructure
General Government Gross Capital Expenditure
2.00% 2.88%
as % of GNI (Current LCU) 2017
Income Tax
Salary at which rate changes to 40% [€/£] €34,550 €52,528
Effective total tax rate on dividends at higher rate 52% 32.5%
Yes – 3% USC levy on income over
Different assessment for self-employed No
€100,000
Yes – recent introduction of KEEP for
Possible to defer income tax on share-options given to specific key employees Yes
SMEs
Capital Gains Tax
Standard rate 33% 20%
Entrepreneur relief – CGT rate 10% on qualifying assets up to €1m
Effective rate first ~€1m on exit after five years 10% 10%
Effective rate first ~€11m on exit after five years 31% 10%
Capital gains tax rate on disposal of shares in SMEs 33% 10%
Capital gains tax rate on Employment and Investment Incentive Scheme qualifying investment or
33% 0%
equivalent gains
Corporate Tax
Knowledge Development Box / Patent box income 6.25% 10%
Corporate Tax rate (UK’s by 2020) 12.50% 17%
R&D Tax Credit – upfront refunds for early stage/scaling companies No Yes
Capital gains tax business asset rollover relief No Yes
Value Added Tax
Standard Rate 23% 20%
Registration Threshold for SME providing services €37,500 €96,3302. GROW IRELAND’S BUSINESSES
Other Recommendations
Key Priority:
Introduce an Investor Relief,
offering a lower 20% rate of CGT
Surpass the UK offering to to those who invest in SMEs, as
defined by the European
entrepreneurs by raising Commission, in order to boost
investment in the indigenous
the lifetime cap on sector.
Reduce income tax on dividends
qualifying gains for for entrepreneurs to 30%, using
Entrepreneur Relief from the same qualifying criteria as for
Entrepreneur Relief.
Capital Gains Tax to €15m Make the R&D tax credit more
attractive to SMEs by allowing an
(cost = €56m p.a.) upfront claim and increasing the
tax credit rate to 30%.HUMAN CAPITAL
The percentage of firms in the GDA reporting a skills shortage in Q2 2018:
37% 63%
The percentage of firms in the GDA reporting a skills shortage has increased from
47% in Q4 2016.HUMAN CAPITAL
HUMAN CAPITAL
The impact of childcare costs on businesses in the Greater Dublin Area,
Q2 2018
7%
28%
40%3. INVEST IN IRELAND’S HUMAN CAPITAL
Other Recommendations
Key Priority
Help Irish firms to attract skilled
specialists by allowing the Special
Increase female labour Assignee Relief Programme (SARP)
to apply to new recruits where the
market participation by employer firm is an SME by EU
definition.
expanding access to Make the Key Employee Engagement
affordable childcare and Programme (KEEP) workable by
issuing detailed guidance on
examining the impact of valuations and lifting the 50% salary-
based restriction on the value of share
the tax system on the options granted to an individual.
Exempt employer-funded professional
return to work by second membership fees from taxation as
earners. Benefit-In-Kind where they are
commercially necessary.STRATEGIC PRIORITIES
Ireland’s Ireland’s Ireland’s
Infrastructure Businesses Human Capital
• Meet the fiscal • Raise the lifetime cap on • Increase female labour
commitments as outlined qualifying gains for market participation by
in the NDP, requiring Entrepreneur Relief from expanding access to
€7.3 billion in gross voted CGT to €15m. affordable childcare and
exchequer funding for • Introduce an Investor examining the impact of
public capital Relief, offering a lower the tax system on the
expenditure. 20% rate of CGT to those return to work by second
• Prioritise projects for the who invest in SMEs. earners.
Greater Dublin Area: • Reduce income tax on • Allow SMEs to avail of
MetroLink, DART dividends for the Special Assignee
Expansion Progamme, entrepreneurs to 30%, Relief Programme
BusConnects, Shannon using the same qualifying (SARP) for new recruits.
water pipeline. criteria as for • Make the Key Employee
• Use the Rainy Day Fund Entrepreneur Relief. Engagement Programme
as an insurance policy for • Make the R&D tax credit workable.
the National more attractive to SMEs • Exempt employer-funded
Development Plan. by allowing an upfront professional membership
• Ring-fence above-profile claim and increasing the fees from taxation as
revenues for investment tax credit rate to 30%. BIK.
in infrastructure.GO RAIBH MAITH AGAIBH
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