Budget 2019 Submission - Cork: The best place for business CorkChamber.ie - Cork Chamber
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Budget 2019 Submission Cork: The best place for business CorkChamber.ie
Executive Summary: The Three Key Asks
While every Budget has competing spending priorities, in this
submission we present the key measures through which Government
can improve Cork and Ireland as a place to live and do business.
The priorities proposed below are identified by our members, who combined
have a total headcount of over 100,000 in Cork.
Priority #1: Housing
Housing is the key issue that the Government need to address both to ensure economic stability
and that employers are able to attract and retain a highly skilled workforce. From a business
perspective, this is one of the main factors that can be controlled in the face of increasing
international uncertainty. First, we propose that Government explores all options, including
a time-bound reduction in VAT, to improve the commercial feasibility of developing urban
accommodation for rent, as spiralling rents and housing costs are putting a growing pressure on
our national competitiveness and restricting disposable income. Second, we suggest Government
to further increase state investment in social and affordable housing.
Priority #2: Tax Reforms
With targeted changes in our tax system, Budget 2019 can have a real impact on improving the
competitiveness of Irish business. Principally, we ask Government for income tax reforms to ease
the burden on middle income earners and promote tax equity between PAYE workers and the
self-employed. In parallel, we recommend a reduction in Capital Gains Tax to stimulate more
investment. Lastly, we suggest that a single 12.5% corporate tax rate is applied on all income.
Priority #3: ISSC In Cork
In Cork, we have an opportunity to build an International Shipping Services Centre in Cork (ISSC)
with huge job creation potential. As part of budget 2019 we ask government to commit to the
principle of creating an ISSC in Cork and explore whether tax measures can be availed of to
encourage international maritime finance companies to set up a presence in Ireland.
2 Cork ChamberContents
Executive Summary: The Three Key Asks 2
Introduction to Budget 2019 4
Budget 2019 4
Economic Outlook 5
What Our Members Say 6
Quality of Life in Ireland 7
Rent & Housing 7
Public & Sustainable Transport 8
Supporting Working Parents 9
Workplace Wellbeing 10
Competitiveness of Ireland Inc 11
Designation of an International Shipping Services Centre in Cork 11
Income Tax Reforms 12
Capital Gains Tax 13
Tax Equity and Supporting Microbusiness 14
Corporate Tax 15
Retain 9% VAT Rate for the Hospitality Sector 16
Employee Share Schemes 17
Pensions 18
Stimulating R&D Activities in SMEs 19
Employment and Investment Incentive Scheme 20
Rainy Day Fund 21
DIRT Reduction 21
Infrastructure 22
Project Ireland 2040 22
Broadband 23
Cork Events Centre 23
Investment in Tourism Infrastructure 24
Increased Funding for Tourism Ireland to Grow Overseas Tourism 24
Education and Skills 25
Social Infrastructure 26
Cork Chamber’s Budget Committee 27
Budget 2019 Submission 3Introduction to Budget 2019
Cork Chamber seeks to champion, promote and drive a strong vision
for Cork as the best place for business. A thriving place driven by a
successful, progressive and influential membership.
We seek to be dynamic and forward thinking, to be purposeful change
makers, to be responsible and inspiring. Our 1,200 members who
employ 100,000 people across Cork County are our motivation.This
Pre-Budget Submission has been developed based on feedback from
our members with guidance from Cork Chamber’s Budget Committee.
Budget 2019
The Summer Economic Statement outlined plans to reduce the budget deficit to 0.1% of GDP in
2019. This means that a total additional €3.4bn is available for allocation in Budget 2019.
Pre-committed expenditure amounts to €2.6bn, broken down as follows:
• €1.5bn increase in capital expenditure as part of National Development Plan
• €0.3bn carryover costs of measures already introduced
• €0.4bn in public sector pay deals
This leaves €0.8bn for further allocation unless new revenue raising measures are introduced.
4 Cork ChamberEconomic Outlook
Looking ahead there is reason for optimism in the economy. The Department of Finance is
forecasting 4.0% growth in 2019. From a Cork perspective, business confidence is generally
high. In our latest economic survey conducted in Q3 2018, confidence among our members was
reported at 95%. The economic outlook in Cork is also positive. Over the coming 12 months, 70%
of our members expect to see an increase in net profits while another 49% plan on increasing
their headcount. At the same time 73% forecast an increase in turnover in the next year.
Countrywide, we are fast approaching a return to full employment. At 5.7% the current state
average unemployment rate is at the lowest rate seen in a decade while in South-West the figure
is 5.3 % as of Q2 2018 1.
Despite these encouraging trends, our member businesses are also highlighting new pressures
emerging within the economy. Competitiveness is once again under threat from the increasing
cost of doing business, rising wage demands, and the high cost of living in Ireland. Our members
report the availability and cost of housing as the second biggest threat facing business in Cork
today topped only by Brexit. If left unaddressed, a shortage of appropriate housing will restrict
companies’ growth capacity and/or lead to rising business costs.
Against this backdrop, we propose that Budget 2019 places a primary focus on improving quality
of life in Cork and Ireland. This should be supported by improving the competitiveness of
business through targeted changes in taxation policies in parallel with increased investment in our
national infrastructure as committed under the National Development Plan.
By taking a prudent approach to our national finances, we believe we will be best placed to
support the livelihoods of people throughout the country at a time where external factors such as
heightened protectionism and Brexit are threatening Ireland’s open economy.
Conor Healy Cork Chamber CEO Seamus Downey Budget Committee Chair
1 https://cso.ie/en/releasesandpublications/er/lfs/labourforcesurveyquarter22018/
Budget 2019 Submission 5What our members say
Our third quarterly economic survey sent to members of Cork Chamber
in July 2018 sought member views about the upcoming budget.
We wanted to know what the budget priorities for business in Cork are. Respondents to the survey
include all types of business sizes and sectors, from sole traders to SMEs and multinationals. The
first and foremost budget priority of members of Cork Chamber was additional housing stimulus.
This is unsurprising given historic high residential rents, which have knock-on effects on business
of all sized. Housing was followed closely by capital investment, and thirdly tax reforms.
Top 3 -
Your Budget Priorities
1 Housing Stimulus
2 Capital Investment
3 Tax Reforms
In the same survey we asked businesses in Cork to prioritise approach government should
take: tax reforms, spending increases or tax cuts. Tax reforms to improve the competitiveness of
business was voted as most important, followed by spending increases and third tax cuts.
Top 3 -
Emphasis for Budget 2019
1 Tax reforms to increase business competitiveness
2 Increase in spending on public services
3 Tax Cuts
6 Cork ChamberQuality of Life in Ireland
Ireland competes not only on its business environment but also
the quality of life it can offer its citizens. The highly mobile nature
of today’s workforce and investors mean that quality of place,
culture and work-life balance play an increasingly important role
in attracting and retaining talent.
Rent & Housing
The cost of housing combined with Ireland’s high marginal tax rate are the main challenges for
Cork Chamber members to attract and retain talent. Across the country, rents are now 2% higher
than their previous peak in 2008. As of Q2 2018 the average cost of renting a home in Cork City
stands at €1,266 per month with supply of new rental stock nowhere near demand.2
For employers the high cost of renting has a direct impact on wage demands and the ability of
businesses to attract and retain staff, who often are forced to live in substandard accommodation
unsuited to their needs. For employees, the cost of renting in Ireland has a negative impact on
disposable income, which could otherwise have been spent in the economy.
Despite significant demand for urban and good quality rental stock, our members in the
construction industry inform us that the economics of building new urban homes targeted at the
rental sector currently does not work. For this reason, only one proposal of scale for new build-
to-let apartments has been brought forward for planning in Cork city centre when discounting
student apartments. As noted by Ronan Lyons, economist and author of the daft.ie Q2 2018 rental
report: “While urban apartments make up almost all the net need for new homes in the country
as a whole, just 13pc of new homes completed in the year to March were urban apartments. This
means it was unsurprising to see rents rise once more.”
Against this reality we strongly encourage Government to explore all incentives to make it
commercially feasible to build new urban apartment schemes suited for the modern worker as
well as turnaround existing stock of over-the-shop type premises.
Recommendations:
1. Explore all options, including a time-bound reduction in VAT, to improve the commercial
feasibility of developing urban apartments, as spiralling rents and housing costs are
putting a growing pressure on our national competitiveness and restricting disposable
income.
2. Further increase state investment in social and affordable housing.
2 https://www.daft.ie/report/2018-Q2-rentalprice-daft-report.pdf
Budget 2019 Submission 7Public Transport
Irish cities continue to be overly reliant on private vehicles as the preferred mode of transport. In
Cork City only 3% of the population commute by bicycle. Just 8.5% in Cork City and suburbs use
public transport to get to work, while 14% walk to work.
Although we are seeing encouraging trends such as a 20% increase in bus passengers in Cork
City year on year to 5.046m users and a huge uptake of the Coke Zero shared bike scheme,
congestion and traffic levels in Cork City are now exceeding pre-recession peak levels.
To grow the modal share of sustainable transport, Cork needs further investment in its public
transport needs and a segregated bicycle network.
Principally, we ask Government to identify and invest in dedicated public transport corridors
throughout metropolitan Cork to improve the reliability and attractiveness of busses as a
commuting option. Crucially, these corridors should be adaptable to accommodate light rail in the
future.
In parallel, we ask Government to restore investment in urban cycling and walking networks which
has fallen from a previous €19m to €7m in budget 2017.
Furthermore, we propose that the NTA apply similar capping of ticket prices in Cork as in Dublin
and include Mallow as a commuter station to improve affordability of using public transport.
While additional investment in public and sustainable transport will come at a cost to the
Exchequer, this cost should be considered against public health, social inclusion and
environmental benefits arising from greater usage of sustainable model shares. In addition,
greater investment in sustainable transport will help improve the international image of Irish cities
as modern European places to live and work, thus contributing to the appeal of Ireland as a
location for top talent and a mobile workforce.
Recommendations:
1. Early release of BusConnects funding and implementation of the NTA Cork public
transport study to reduce Cork’s high level of car dependency and to enable a shift to
more sustainable commuting patterns, including light rail.
2. The NTA to designate Mallow as a commuter station and apply capping of ticket prices
across commuter lines in Cork like Dublin.
3. Commit to undertaking a feasibility study of connecting Cork, Dublin and Belfast with high
speed rail.
4. Restore investment in urban cycling and pedestrian networks to €19m per annum.
8 Cork ChamberSupporting Working Parents
The high cost of childcare in Ireland often means that for parents, and especially lone parents, it
does not make economic sense to work after having children. Childcare costs in Ireland remain
among the highest in the OECD for both couples and single parents.
The participation tax for women with two children in Ireland who must pay for childcare is a
staggering 94% as highlighted by Tax Strategy Group, which in turn has a significant impact on
female workforce participation.3
The challenges of retaining women in the workforce and preventing brain drain has been
highlighted as a concern by Cork Chamber’s members, which is in part attributed to the difficulty
employees face in accessing affordable childcare. By ensuring access to affordable, high-quality
childcare services (including after-school care) throughout the country, we can reduce living costs
for families, enhance female labour market participation, address the gender pay gap, improve
the outcome of children, and increase Government revenue through a higher rate of labour force
participation.
While we welcome Government extending the Early Childhood Care and Education Scheme to
cover a second year and the introduction of some universal childcare subsidies, we believe that
more financial commitment is required to ensure that childcare is adequately financed in the long-
term.
Recommendations:
1. Build on additional funding allocated in last year’s budget with a focus on accessible,
affordable and high-quality childcare services.
2 Extend the ECCE Scheme to cover the all months between the end of maternity/paternity
leave and school start, as well as after-school care.
3. Aim to incrementally increase total investment in childcare to 1% of GDP, as
recommended by UNICEF.
3 https://www.daft.ie/report/2018-Q2-rentalprice-daft-report.pdf
Budget 2019 Submission 9Workplace Wellbeing
We believe that Government can play a role in supporting wellbeing in the workplace and
encouraging more businesses in Ireland to engage in CSR activities.Changing the method by
which the cost for employee benefits such as sports, wellbeing or nutrition programmes are taxed
is one practical way of supporting more businesses to offer employee benefits.
Recommendation:
1. Support workplace wellbeing by allowing employer contributions for wellbeing
programmes to be allowable tax expense with Benefit In Kind (BIK) exemption.
10 Cork ChamberCompetitiveness of Ireland
At a time of growing international protectionism, it is important
to make targeted changes to our own national tax system to
improve the overall competitiveness of Ireland Inc.
Below we set out a series of targeted changes that collectively will significantly
improve Ireland’s attractiveness as a place to do business.
Designation of an International Shipping Services Centre in Cork
Building on Cork’s strong maritime history and the skills and expertise of the International Financial
Services Sector already located here, we believe there is great potential for developing an
International Shipping Services Centre in Cork akin to the IFSC in Dublin, with the potential to
create thousands of new jobs in the future.
As part of budget 2019 we ask government to commit to the principle of creating an ISSC in Cork
and explore whether tax measures can be availed of to encourage international maritime finance
companies to set up a presence in Ireland.
Recommendation:
1. Designation of an appropriate zone in Cork City for an International Shipping Services
Centre akin to IFSC to encourage companies to locate there.
Budget 2019 Submission 11Income Tax Reforms
At present, high marginal tax rates apply at relatively low levels of income. Employees earning
less than the average industrial wage pay the higher rate of 40 percent in income tax, starting at
just € 34,550. This represents a significant tax burden on average income earners, with knock-on
impacts on female labour market participation, welfare traps for low skilled workers, and our ability
to attract and retain international talent.
At the same time, the Tax Strategy Group’s paper on Income Tax and USC show that 37% of all
earners in 2018 are exempted from paying income tax, which is neither right nor equitable and
contributes to the high tax burden placed on workers with average incomes.
For Ireland to become more competitive as a destination for international workers and investment
our corporate tax rate must be complemented by an effective and attractive personal tax regime.
However, we are mindful of the impact, which changes to income tax would have on the fiscal
space at a time when significant increases in investment are required across our social and
economic infrastructure. As such, we ask Government commit to review and make incremental
changes to income tax rates over a multi-annual basis.
Ideally, over several budgets, we should move to a position where Ireland moves to a broader
income tax base in line with comparable countries at rates that align with OECD averages to
enhance our competitiveness and reduce the burden on middle income earners.
Recommendations:
1. We recommend that Government continues to make incremental increases to the entry
point to the higher rate of tax on a multi-annual basis. This avoids average wage earners
falling into the higher tax bracket and enables Ireland to become more in line with
comparable OECD countries to maintain competitiveness.
2. We also request Government to broaden our income tax base to bring more people into
the tax net, better aligning with OECD averages.
12 Cork ChamberCapital Gains Tax
Ireland’s Capital Gains Tax (CGT) rate of 33% is the fourth highest in the OECD, 10% above the
median rate in the OECD, and acts as a disincentive against diversification.
Our rate of CGT as it stands provides a disincentive to setting up business in Ireland for both
domestic and foreign entrepreneurs, and arguably acts as an incentive to off-shoring for domestic
entrepreneurs. Consequently, Ireland’s CGT rate dampens business activity and causes stagnation
in terms of scaling, investment, and the purchasing and selling of businesses that is needed for
Irish indigenous industry to grow.
Cork Chamber proposes that our rate of CGT is reduced to allow Ireland to compete more
favourably with the UK, which in turn will stimulate further investment.
We note the observation of the Tax Strategy Group that moving to a 25% rate over a two to
four-year period at a total estimated cost of €272m (in the absence of behavioural changes).4
However, the group also notes that a rate of 25% would position Ireland near Norway and
Denmark for international competitiveness, and would bring benefits from increased transactions,
and improved environment for business, and enhance economic growth an activity, increase
Exchequer revenues, and assist new company formation.5
To encourage domestic entrepreneurial activity, we recommend Government to also align the
Entrepreneur Relief with that of the UK including value and lifetime limit.
We ask that Government commits to reducing the effective CGT tax take over two to four
consecutive budgets, which will assist in providing clarity and certainty to investors and business
owners.
Recommendations:
1. Improve the competitiveness of our CGT model by reducing the effective tax rate to
25% over two to four consecutive budgets to support economic activity, scaling and new
company formation.
2. Align the rate and lifetime limit of the Entrepreneur Relief with that of the UK to support
domestic entrepreneurial activity.
4 Tax Strategy Group / TSG 18/10 Capital and Savings Taxes, p. 5
5 Tax Strategy Group / TSG 18/10 Capital and Savings Taxes, p. 10
Budget 2019 Submission 13Tax Equity and Supporting Microbusiness
Ireland’s taxation system should ensure that innovators, investors and entrepreneurs are
recognised as contributors to growth and are taxed fairly. Government must do more to support
entrepreneurs and enable microbusinesses to grow and succeed. Small businesses face
significant barriers to growth and scaling due to the costs associated with hiring a much-needed
extra staff member. We propose a range of measures to improve the environment for Irish
business owners and we ask Government to implement changes to the taxation system that will
support entrepreneurship and drive growth in our economy.
The Programme for Partnership Government includes a commitment to increase the value of the
Earned Income Credit to €1650 to match the PAYE credit by 2018. If implemented in Budget 2019,
the Tax Strategy Group have estimated that the cost would be €76m. We recommend that this
measure be introduced in full as part of Budget 2019.
Recommendations:
1. Bring the Earned Income Tax Credit for self-employed in line with the Employee Tax
Credit as previously committed to. The earned income tax credit for self-employed
individuals currently sits at €1,150 annually, which is €500 less than an employee.
2. Self-employed earners earning more than €100,000 are faced with an additional
USC burden of 3% more than a PAYE worker earning the same amount of income.
Government should introduce full equity in taxation between self-employed and PAYE
workers.
3. Introduce a temporary tax credit on employer’s PRSI to enable microbusinesses with
less than 10 employees to grow and increase employee numbers in support of growth of
indigenous business.
14 Cork ChamberCorporate Tax
Ireland’s clear and transparent corporate tax system and corporate tax rate of 12.5% have been
contributing factors for multinationals choosing to locate their operations here. Certainty in tax
is an attractive asset and should be valued in the face of global changes. This is particularly
important considering the reform of the US corporation tax code, the UK’s forthcoming exit from
the European Union and ongoing discussions at EU-level regarding a Common Consolidated
Corporate Tax Base and digital taxation.
Ireland’s corporate tax receipts have increased significantly in the last two years, rising 57% to
€7.35 billion in 2016 and rising again by a further 11% to €8.2 billion in 2017. Although experts do
not see a threat to the sustainability of Ireland’s corporate tax receipts in the immediate term,
it should be emphasised that Ireland is a small open economy and is very exposed to external
shocks. The increasing concentration of Irish corporate tax receipts could pose a risk to the
Exchequer, where external factors may influence multinational companies relocating elsewhere,
resulting in a significant decrease to corporate tax receipts. For this reason, we favour a move to a
broader tax base which will reduce exposure to external shocks.
In a move to improve clarity for investors, we suggest that 12.5% is manifested as the rate on all
businesses’ income, and that capital taxes are aligned to CGT rates reduction as set out above.
We believe that a consistent application of 12.5% better supports the proposition of Ireland’s
corporate tax rate for businesses. It also improves clarity for all existing and potential future
businesses.
Significantly, many other economies are proactively reducing their corporation tax rates. While the
scope for Government action in mitigating these factors is limited, it is imperative that Government
continues to be mindful of the risks.
Recommendations:
1. Government must maintain and reiterate Ireland’s 12.5% Corporate Tax Rate and offer
businesses certainty in the face of global changes.
2. Apply a single 12.5% corporate tax rate on all income.
3. We recommend that Government ensure Ireland maintains sovereignty in taxation policy,
while working with international partners and the process of OECD actions on Base
Erosion and Profit Shifting to enhance fairness in international taxation.
4. We recommend that Government exercise caution in over-reliance on corporate tax
receipts in the medium term and considers transferring the revenue raised from over
profile corporate tax receipts into the Rainy Day Fund while building a broader, more
stable tax base.
Budget 2019 Submission 15Retain 9% VAT Rate for the Hospitality Sector
The reduction of VAT from 13.5% to 9% for the tourism and hospitality sector was announced in
Budget 2011 and provided a much-needed boost to the sector during the difficult years of the
financial crisis. Since 2011 over 30,000 jobs have been created in this industry.6
In Cork city and county alone, the tourism and hospitality sector accounts for 19,000 jobs and
contributes €846m to the local economy annually.7
Employment in the tourism and hospitality sector has a particular importance outside urban
centres, providing much needed employment in rural Ireland sustaining 240,000 jobs across
the country. The VAT reduction has improved the competitiveness of this sector, and the first six
months of 2018 have seen a record year for tourism, up 300,000 visitors compared January-
June 2017.8
The period January-June 2018 has seen growth of 6.7%, which comes on the back of a record
performance in 2017. However, Brexit is likely to have a significant impact on tourism. UK visitors
contribute 21% of all overseas tourism revenue but currency volatility of the Sterling has made
visits to Ireland less attractive from this key market. The shift in the sterling/euro exchange rate
has impacted our competitiveness and has exacerbated the perception of higher prices here
than in Britain; it has also made Britain more affordable for visitors from many of our top markets.
While Cork Chamber acknowledges that if the VAT was brought back to 13.5% the Exchequer
could benefit from up to €527m annually9, we are of the view that an increase to VAT at this time
of uncertainty would be detrimental to the hospitality sector. This is particularly the case outside
our large urban areas and especially for smaller, family owned hotels throughout the country
who rely heavily on remaining competitive, assisted in part by the VAT reduction.
Recommendation:
1. Retain VAT at 9% on hospitality and tourism to help mitigate Brexit uncertainty.
6 Restaurant Association of Ireland, http://www.rai.ie/key-issues/
7 Irish Hotel Federation, Cork Tourism Update Budget 2017
8 https://www.tourismireland.com/Press-Releases/2018/August/Mid-year-review-of-overseas-tourism-2018-strong-f
9 Tax Strategy Group / TSG 18/05 VAT issues
16 Cork ChamberEmployee Share Schemes
In recent years, Ireland has been experiencing steady economic growth and with this our
members report growing wage pressures and an increasingly competitive economic environment
for business.
Considering this trend, we welcomed Government’s decision to introduce the KEEP scheme in last
year’s budget to encourage uptake of employee share ownership schemes.
A year into operation it has become evident that the KEEP system is not working as effectively as
envisaged. Low take up of the scheme would suggest that criteria for qualifying is too narrow and
needs to be broadened.
Share incentive schemes offer many benefits to business, especially SMEs, in retaining skilled and
experienced staff and can help motivate employees to support business growth. Consequently,
we believe the KEEP system should be simplified to better target SMEs.
Recommendation:
1. Rework the KEEP scheme to become more attractive for SMEs by broadening its
application and simplifying its operation.
Budget 2019 Submission 17Pensions
With just over one third of private-sector workers currently contributing to a pension scheme,
the future of pension provision in Ireland is a significant risk to the quality of life of our workforce.
Inadequate pension provision for private workers poses a threat to our future economic stability
and the wellbeing of our society. Current contributions to the State pension fund will not be
sufficient to pay the levels of benefits necessary for an adequate standard of living for future
retirees. Pensions savings have failed to recover since the financial crisis and it is now necessary
to introduce a system which will encourage employees to plan for their future security. Existing
reliefs on pensions contributions must be maintained to incentivise saving (which also are good
in the context of high employment and preventing the economy from overheating).
Recommendations:
1. Tax relief on pension contributions currently in place must be retained. Given the low
level of workers currently saving into a pension scheme, this tax relief must be must be
kept as an incentive to encourage increased numbers of savers. To remove it at this
point in time without an alternative pension system in place would hinder uptake and
affect mainly middle-income earners.
2. We welcome the Minister for Social Protection launch of a consultation process for an
Automatic Enrolment Retirement Savings System which is to “stimulate debate and
generate discussion on possible approaches to the design of the Automatic Enrolment
in 2022”. Cork Chamber is supportive of an Auto Enrolment pension scheme with a
realistic lead-in time for businesses. An incremental approach will give business a
chance to adjust and plan ahead. We recommend a gradual approach similar to the
scheme in the United Kingdom.
3. It is crucial that any future Auto Enrolment private pension scheme does not affect the
State pension. This would place an unfair and disproportionate burden on businesses.
18 Cork ChamberStimulating R&D Activities in SMEs
The OECD has found that the current offering of tax credits is not always well suited to the needs
of smaller, domestic firms or young businesses. They outline that Ireland’s direct government
funding of business innovation and research lags behind many competitor countries and
recommends that “a well-designed, competitive and transparent system of direct supports can
complement existing tax incentives and can direct public funding to areas of high social and
economic returns.”
Cork Chamber proposes that the rules regarding tax credits are simplified for SMEs to incentivise
more take-up. One area which could be made simpler relates to aligning credits for outsourced
R&D expenditure with those available for in-house R&D. The limits should allow for outsourcing
of research for the purposes of the R&D tax credit and should be increased to encourage more
collaboration between industry and research institutions with ancillary spin-offs in local economies.
In comparison to multinationals with in-house research teams, SMEs tend to avail of outsourcing
and should be allowed flexibility to claim higher costs as a tax credit. Such a limitation of the
scheme is an example of how current tax rules are not keeping pace with the realities and ways of
working in businesses and a modern economy.
Uncertainty regarding whether one will get the tax credit acts as a disincentive to apply for the
tax relief, and this is especially the case for SMEs. We also believe that simplified documentation
requirements should be required for SMEs where for example they have already satisfied the
requirements of an Enterprise Ireland or IDA R&D grant.
Cork Chamber asks that the ambiguity of qualifying expenditure is addressed as part of the
forthcoming budget, involving legislative changes if necessary. There should be some identified
safe harbours that SME businesses can avail of with administrative ease.
Recommendations:
1. Simplify the documentation requirement for SMEs to avail of R&D tax credit to encourage
higher take-up rates.
2. Reduce the restriction on outsourcing of R&D, particularly for SMEs and where
collaborating with third level institutions.
Budget 2019 Submission 19Employment and Investment Incentive Scheme
Targeted incentive schemes such as the Employment and Investment Incentive (EII) are welcome
and should be encouraged as a means of stimulating domestic industry.
Feedback from our members suggests the application of the scheme is currently too narrow,
which undermines confidence in this measure and acts as a barrier to investment and economic
growth. At a time of significant risks created by Brexit we ask that Government consider the
importance of the EII Scheme along with its efficacy as currently administered. From a practical
perspective, we would also recommend that Irish Revenue are allocated additional resources to
help administer the EII Scheme.
A particularly negative aspect of the EII Scheme is that it is not generally open to companies
older than seven years. We believe this should be reviewed as part of a consideration of the EII
Scheme in light of other comparable regimes like the UK’s EIS Scheme for example.
We believe reforming the EII Scheme would have a positive impact on the Exchequer overall by
increasing investments and thus contributing to economic growth and jobs stimulation.
Recommendation:
1. An overall review of the EII Scheme to be undertaken with the aim of delivering a best
in class and fit for purpose incentive scheme designed to stimulate employment and
make it more attractive to SMEs.
20 Cork ChamberRainy Day Fund
Government announced the establishment of a Rainy Day Fund in Budget 2018.The questions we
must now ask are how and when such a fund should be accessed and what it should be used for.
It has been suggested in research conducted by the Parliamentary Budget Office that the Rainy
Day Fund could reduce the volatility of Government finances if it was structured to accept all
receipts of specified volatile revenue streams over a certain threshold and use these to maintain
or increase capital spending in a downturn. Cork Chamber views the establishment of the Fund as
an opportunity to ensure greater long-term stability in capital spending. The National Development
Plan is underpinned by projections of the economy’s potential growth which is assumed at a
minimum of 2% over the period 2022 to 2027. Using the Rainy Day Fund to support the delivery
of the National Development Plan would ensure that we don’t find ourselves unable to maintain
investment in capital infrastructure in times of recession.
As the fund is established and built up we suggest that Government utilises capital to invest in
low risk capital projects, such as our education sector or PPP-schemes identified in the National
Development Plan to make a return on tax payers’ money.
Recommendation:
1. Build up a Rainy Day Fund and utilise available funds on low risk capital investments and
Public Private Partnership projects committed to in the National Development Plan.
DIRT Reduction
Considering record low interest rates on savings and the difficulties facing prospective home
owners to build up required deposits for mortgage approval, we suggest that DIRT is reduced
from its current rate of 39% to the pre-crash level of 23% to incentivise greater saving rates.
Recommendation:
1. Reduce DIRT on savings to 23%.
Budget 2019 Submission 21Infrastructure
Project Ireland 2040
The National Development Plan and Ireland 2040 firmly endorses Cork as Ireland’s second city
and sets ambitious targets for future population and jobs growth for our city region.
For Cork to achieve Government’s vision of becoming the fastest growing city in Ireland over the
next 20 years and to sustainably accommodate new people, investment and employment, the
city requires upfront investment to maximise opportunities.
Investment in infrastructure has been a major concern of business in Cork and the rest of
the country over the last number of years following a decade of under investment during the
economic downturn.
As such, we welcomed the commitment to €116 billion investment in infrastructure over the next
ten-year period announced under the National Development Plan as part of Project Ireland
2040. The development of Project Ireland 2040 involved years of stakeholder engagement and
consultations, and the final result marks a step-change in Irish spatial planning. It is therefore
imperative that commitments made in these plans are realised and that long neglected
investment in infrastructure increases.
Recommendation:
1. Commitments to projects and spending announced in the National Development Plan
must be delivered upon within the timeframes committed to with particular emphasis in
this region on BusConnects, the M28 to Ringaskiddy, The N22 Dunkettle Interchange
upgrade, M20 Cork-Limerick Motorway, the N22 Cork-Kerry road and the Eastern
section of the Northern Ring Road.
22 Cork ChamberBroadband
Government must act expediently to deliver top quality broadband that delivers for everyone and
every business throughout Ireland. We must ensure that Irish businesses can compete on an even
playing field and have access to the manifold opportunities that trading online brings. Access to
broadband enables businesses to grow, create jobs and contributes to their local economies.
Broadband is a quality of life factor and enables modern arrangements for businesses that want
to offer employees flexibility in their working lives. It is therefore a significant factor in attracting
FDI companies to the region. The National Broadband Plan, which has already been significantly
delayed, must be reviewed and rolled out as soon as possible to allow for Ireland’s regions
and rural areas to have access to high quality broadband and the benefits which this brings to
businesses and people. Rural and regional Ireland cannot continue to be left behind on such a
vital element of modern life.
Recommendation:
1. The now much delayed National Broadband Plan must be delivered as soon as possible
by Government.
Cork Events Centre
The planned development of an events centre in the heart of Cork City will bring significant gains
to both the Exchequer and city centre business, as well as adding to the attraction of Cork as a
must visit location. With a carefully planned design, the proposed events centre will accommodate
a wide range of events under one roof. This will enable Cork to attract international events to the
city that were previously not possible. The ‘Let’s Celebrate Report 2017 Ireland’ by BOP Consulting
found that for every €1 spent on tickets in Ireland and additional €6.06 of revenue is generated
in the wider economy. The same consultants also estimated that the Cork Events Centre will
contribute positively to the regional economy to the tune of €55 million per annum, as well as
support 941 full time employees through the expenditure of visitors to events.
We note that the events centre will be commercially viable once built and will thus not require
Central Government funding on an ongoing annual basis. In addition to the indirect economic
benefits, the State will benefit from revenue associated with the construction of the centre as well
as from the ongoing tax take and rates income.
Recommendation:
1. We ask Government to respond to the request for additional State funding to ensure the
development of Cork Events Centre as a hugely important cultural and economic asset
to the Southern region.
Budget 2019 Submission 23Investment in Tourism Infrastructure
Tourism supports 240,000 jobs in the Irish economy, many of them in rural areas. Supported by
new place brands such as the Wild Atlantic Way and Ireland’s Ancient East, Tourism Ireland has
had success in growing international visitor numbers including from new markets. To continue
growth in tourism and ensure a pleasant visitor experience we suggest Government allocate
additional funding for investment in our tourism infrastructure and key tourism gateways.
Recommendations:
1. Upgrade of the N71 to West Cork, the Southern starting point of the Wild Atlantic Way.
2. Deliver on the National Greenway Strategy to enable growth in activity-based tourism.
3. Continue State investment in our cultural sector and economy
Increased Funding for Tourism Ireland to Grow Overseas Tourism
Members of Cork Chamber have expressed an overwhelming preference for increased support
for the tourism sector to minimise any threats from Brexit. Ahead of last year’s budget, 77% of
respondents to our economic survey favoured the allocation of increased supports to market
Irish tourism.
Tourism is our country’s largest source of indigenous employment accounting for 4% of GDP.
The British tourism market is the largest in Ireland and in Cork. However, since the British vote
to leave the UK we have seen a reduction in the number of UK visitors to our shores, although
to date most of this decrease has been made up for an increase in visitors from the US and
continental Europe. Brexit is the greatest challenge to face Irish tourism since the global
economic recession of 2008, where the value of the UK market fell by 23% in the space of 12
months.
For Cork and the Southern region, we ask Government to add €2m per annum to the Tourism
Ireland regional access fund for 2019 onwards to grow tourism in a post Brexit environment.
In recognition of the hugely important role that tourism plays for job creation and retention in
especially local economies outside of Dublin and Ireland’s other cities, we ask that Budget 2019
includes increased funding for Tourism Ireland to grow overseas tourism.
Recommendations:
1. Allocate an additional €12m towards the tourism marketing budget for Tourism Ireland
to market Ireland overseas.
2. Add €2m per annum to the Tourism Ireland regional access fund for 2019 onwards to
grow tourism in a post Brexit environment.
24 Cork ChamberEducation and Skills
The availability of skills has re-emerged among the top threats to business in Cork alongside
Brexit and the cost and availability of housing. Members of Cork Chamber now have significant
demand for skills in areas such as engineering, hospitality, construction, science, marketing and IT.
However, tertiary colleges in Cork are currently at capacity after growth in student numbers in
recent years. After years of cutbacks over the last decade, it is critical that higher education
funding deficits are addressed to enable our third level institutes to invest in new programmes and
sustaining the projected growth for the Cork region. This is particularly pressing for providers such
as CIT, which are prohibited from borrowing to improve their infrastructure.
We also ask Government to build on last year’s budget allocation to strengthen investment in
workforce development, thus enabling more people upskill and support lifelong learning.
In addition, the recent funding call for PhD training centers (circa 30M euro total value) will require
a large step up in the level of national and international coordination of PhD training to be strongly
linked to industry needs.
Recommendations:
1. Increase government funding for higher education to sustain projected jobs and
population growth, and deliver on commitments made to Tyndall, Munster Technical
University and UCC in Project Ireland 2040.
2. Build on budget 2018 by growing state funding for workplace development to allow for
upskilling of Ireland’s existing workforce.
3. Better coordination of national and international PhD training and research to be strongly
linked to industry needs.
Budget 2019 Submission 25Social Infrastructure
In addition to hard infrastructure, for Cork to accommodate a growing population is it equally
important that we invest in our social infrastructure needs. Over the next twenty years,
Metropolitan Cork is set to become home to 500,000 people. For this to happen we must plan
for and deliver social infrastructure to enable the best quality of life possible for all citizens.
Specifically, we ask Government to invest in additional educational capacity in our primary and
secondary schools as well as third level as specified above. We propose that a new international
school in Cork is part of this investment.
In addition, further investment in healthcare as specified under the National Development Plan
is required including more primary healthcare centres in urban areas targeted for growth and
hospitals.
Recommendations:
1. Increase investment in social infrastructure to facilitate Cork’s population growth targets,
including in health and education.
2. For Cork specifically, we propose the new hospital under the National Development
Plan is front loaded alongside the elective only Cork hospital.
26 Cork ChamberCork Chamber’s Budget Committee
Seamus Downey, EY (Chairperson)
Stephen Keohane, KPMG
Brian Cronin, Deloitte
Andrew O’Brien, PWC
John Fuller, J W O’Donovan Solicitors
Budget 2019 Submission 27CorkChamber.ie Find us on
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