Submission to Government in advance of the presentation of Budget 2021 & the National Economic Recovery Plan - August 2020
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Submission to Government in advance of the
presentation of Budget 2021 & the National
Economic Recovery Plan
August 2020
1
The American Chamber of Commerce Ireland
The Voice of US-Ireland Business
The American Chamber of Commerce Ireland (AmCham Ireland)
is a non-partisan and not-for-profit business organisation. We
receive no public funding. Our funding comes wholly from our
members – the US-Ireland business community. AmCham’s
focus is to provide advocacy with purpose and connectivity with
purpose on behalf of our members. We do this through regular
engagement with policy makers in Ireland and internationally.
AmCham believes US companies and their teams here play a
critical role in Ireland’s economy and society and they are the
‘shining lights’ of their global operations - the centre of a vibrant
two-way transatlantic bridge - between the world’s two largest and
most integrated economies. The two-way relationship is evidenced
by the fact that Irish companies employ almost as many people in
the United States as US companies employ in Ireland. The US
operations of Irish companies are leaders in many sectors from
construction supplies to life-sciences to nutrition.
Contents
3 Statement from President of the American
Chamber
5 Taxation
Recommendations for jobs growth, economic recovery,
and sustainable public finances
7 Public Expenditure
Recommendations to future-proof Ireland’s capacity to
attract inward investment
10 National Economic Recovery Plan
Recommendations
2Statement by AmCham President – Budget
2021 & The National Economic Recovery
Plan
Budget 2021 and the National Economic Recovery Plan come at an unprecedented moment for
Ireland, the European Union and the global economy and community. Our society and economy have
been radically impacted by the COVID-19 pandemic. We recognise that the policy challenges facing
the Government are immense. They include safeguarding the nation’s health and protecting our
health-care system amid a rampant global pandemic; protecting employment and maintaining social
protection in the midst of an economic downturn and planning for the increasingly likely unsuccessful
outcome in EU-UK trade negotiations.
In meeting these challenges, it is essential to protect and enhance Ireland’s reputation as a globally
competitive and cost-efficient place to do business, invest and create jobs. Global business models
and global supply chain operability will continue to change – a process that has been dramatically
accelerated due to the pandemic. The concerted effort to enhance Ireland’s reputation as a global
location of choice for talent and innovation must focus on identifying and exploiting areas for an “Irish
advantage” in this rapidly changing global trade and investment environment.
In this Submission to Government in advance of the presentation of Budget 2021 and the National
Economic Recovery Plan, the American Chamber of Commerce Ireland (AmCham Ireland) lay out
our recommendations.
In light of the challenges facing our country and the very difficult policy choices facing Government
we have included in this submission what we believe are the most important policy areas to restore
economic growth (in our separate Finance Bill submission, we address additional, more detailed,
issues) We have organised this submission in three sections - recommendations on taxation, priorities
on public expenditure and our recommendations for the National Economic Recovery Plan.
We are committed to engaging constructively with Government to play our part in economic recovery.
We strongly welcome the focus placed on the US-Ireland relationship in the ‘Programme for
Government- Our Shared Future’ and the role Ireland plays as a bridge between the European Union
and the United States. Ireland is perfectly placed to enhance our role as a transatlantic bridge. The
recent securing by Ireland of a seat at the UN Security Council and the election of Minister Paschal
Donohoe as Eurogroup President is further evidence of our international standing. As a rules-based
democracy, governed by consent with a stellar track record as a location for US investment we
consistently demonstrate that we are a trusted business partner of the US. We believe that the extent
to which Ireland strengthens its role as a transatlantic bridge will have a direct bearing on the pace
and nature of our economic recovery.
While the road ahead is challenging, we see many reasons for grounded optimism. In the past
decade, Ireland recovered from a devastating recession - creating record levels of employment, with
a commitment to sustainable economic policies and balancing our public finances. During the current
pandemic, we have demonstrated our capacity to radically transform how we deliver public services
– including our health-care system, to support businesses, to maintain essential services including
advanced manufacturing and to maintain social cohesion. The 160,000 talented women and men
working for our member companies throughout Ireland are a key contributor to our resilience and our
global reputation. They proved, once again, that Ireland is a trustworthy and resilient partner in
essential global supply chains in pharmaceuticals, medical technology, semi-conductors, nutrition,
and financial services. Their work is also essential for our domestic economy and Irish businesses.
For the most recent year that data is available (2018) the Irish operations of multinationals spent over
€6.3bn on goods and services in the Irish economy.
3On behalf of our members, I also want to pay tribute to our front-line heroes in the health service and
all those who worked tirelessly – both behind the scenes and in the public eye – to care for those
afflicted with the virus and to protect the community. I also want to thank the many public servants in
Government Departments and State Agencies that moved so swiftly to protect jobs and businesses
– in the Department of Business, Enterprise and Innovation, IDA Ireland and the Revenue
Commissioners.
Our recommendations are made in support of recovery and growth for all stakeholders in Irish society
and business – we look forward to supporting Government in meeting this shared objective.
Carin Bryans
President 2020
American Chamber of Commerce Ireland
4Taxation |
Budget 2021
Recommendations for jobs growth, economic recovery, and sustainable public finances
An environment that encourages tax certainty is critical for economic recovery including maintaining an internationally
competitive, transparent and robust corporate and personal tax regime, supporting the coordinated reform of
multinational corporate tax led by the OECD and the maintenance and enhancement of tax incentives to stimulate job
creation and investment in research, development and innovation.
RECOMMENDATIONS
AmCham recommends a pro-jobs, pro-enterprise taxation environment to achieve
economic recovery. We recommend Government commits that it will not increase
any taxes that could hinder job creation and retention. We specifically recommend
the following:
- The Government re-affirms its commitment to Ireland’s 12.5% corporate
tax rate and reaffirms that direct taxation policy will remain a matter for
individual member state competence within the European Union in both
the Budget 2021 Statement and the National Economic Recovery Plan.
- Government commits to no increases in PRSI, USC or income tax on
income earned from employment or self-employment.
- Government commits to no increase in the rate of employers’ PRSI or any
other levy on employment.
- A separate commitment is given that there will be no diminution (but there
may be enhancement) to the Research & Development Tax Credit over
the lifetime of the Government.
- On Budget Day, Government announces a time-limited consultation and
review process to internationally benchmark how Ireland’s income, capital
gains and corporate tax systems support job creation, innovation and
productivity – with a focus on:
• Employees
• Start-ups
• Small businesses
• Individuals who have come to Ireland to build a career or start a business;
• Individuals who have come to build a career or have been seconded here
due to their skillset or profession.
• Special circumstances of remote workers
The objective of this review is to identify current barriers in our system and
implement enhancements that have been proven to work elsewhere.
AmCham believes that the best way to broaden our tax base is to create
more jobs. Any other broadening measures should not impact on job
creation.
5- A competitive personal tax regime is an important deciding factor for global
talent We reaffirm as we have in past submissions, that the marginal
personal income tax rate (together with PRSI and USC) with its low entry
threshold should be reformed to enhance Ireland’s ability to retain and
attract leadership talent and specialised skills; improve productivity and
reduce upward pressures on labour costs.
When exchequer finances allow for the process to begin, the American
Chamber supports reforms focused on rewarding productivity. This should
include providing direct relief to individuals by increasing the entry point to
the top marginal income tax rate and by reducing the current tax rate to
below 50% on a phased basis of 1% per annum.
- Corporation Tax The National Competitiveness Council has observed
that ‘Ireland’s corporation tax regime should remain an important part of
Ireland’s long-term wider competitiveness offering to support enterprises
based in Ireland to invest, innovate and compete internationally.’
The Corporate Tax Roadmap has played a vital role in providing certainty
of process throughout the implementation of the Anti-Tax Avoidance
Directive, the Chamber recommends that a similar approach is adopted in
setting out annually, with certainty, the next steps for Ireland’s corporate
and personal tax regimes.
At an international level, AmCham maintains that a consensus to future-
proof the global taxation environment can be reached, and this is best
achieved through a unified approach at OECD level, rather than unilateral
measures which would only serve to fragment the global taxation
environment . We believe that any recommendations in this area should
be evidence based, targeted to specific remaining BEPS concerns, and
remain grounded in the agreed concepts of substance and value creation
in terms of the allocation of taxing rights between jurisdictions.
The Chamber recommends the evolution of the promotion of innovation
within our corporate tax regime. Our members would appreciate the
expansion of qualifying scientific fields, within the OECD model, for the
R&D Tax Credit to cover emerging areas of scientific and technological
breakthrough.
Lastly, although it remains very positive that Ireland continues to hold its
position at the top of the EU ranking for ease of tax administration – there
remain opportunities for improvement in areas which remain complex,
such as the absence of a participation exemption.
.
6Public Expenditure |
Budget 2021
Recommendations to future-proof Ireland’s capacity to attract inward investment
Budget 2021 and the National Economic Recovery plan should make every effort to future-proof our economy and society so
that Ireland stays in a position to maintain and enhance its global reputation for talent and innovation. The pandemic has
accelerated the pace of global transformation in digitalisation, data analytics and management, financial services, advanced
manufacturing, quantum computing and artificial intelligence – and this list is not exhaustive. The strategic investments in
skills and innovation that Ireland has made in the past – for example in the National Institute for Bioprocessing Research &
Training – have been justified many times over.
RECOMMENDATIONS
Resource Key Authorities
In the Post-Covid 19 era, Ireland must strengthen its capacity to retain and attract
inward investment and grow employment. The American Chamber recommends
continued investment in the trade and investment arms of the State, in particular the
agencies and institutions that are central to Ireland’s economic recovery and our global
reputation. It is critical that public expenditure provision ensures they have the
resources and skills they require to fulfil their mandate to the highest international
standards. They include (and this is not an exhaustive list):
• Trade and Investment The competition for investment internationally will be intense
as international investment flows react to changing trade policy and uncertainty
globally, including Brexit. Competitor countries are responding by continuously
improving their offering to inward investment. We welcome the additional funding
included in the July Stimulus Programme for IDA Ireland. In Budget 2021, Ireland must
adequately resource its international economic diplomacy including its diplomatic
network, state agencies such as IDA Ireland and Enterprise Ireland, and the
international innovation role played by Science Foundation Ireland.
• Data and Cyber Security Authorities We welcome the significant progress made in
recent years in funding The Data Protection Commission. Given the scale of the data
ecosystem now based in Ireland, it is critical that the resourcing of this office not just
keeps pace but stays ahead of the growth in the complexity of its role. The National
Cyber Security Centre too is a key competent authority on which Ireland’s digital
economy depends. The American Chamber strongly recommends further investment
and funding in both these organisations.
• Tax Authorities The Revenue Commissioners ‘Revenue’ has been rightly recognised
for its response to the pandemic - and, more long-term, its digitisation agenda. These
hard-won advances need to be expanded and resourced appropriately. AmCham also
recommends the creation of a competent authority to deal with international transfer
pricing disputes, following from the introduction of a domestic regime in 2011. It is
critical that the Irish Competent Authority has the relevant resources to meet challenges
and seek to protect the domestic tax base.
7Digitise Ireland’s State Sector and Society
The American Chamber welcomes the commitment made in the Programme for
Government – Our Shared Future that budget and expenditure plans for each
department must include measures to drive the digitalisation of public services. Ireland
needs to position itself as a global digital leader and the Government must lead by
example1.
Progress on digitalisation and innovation in the public sector has taken place on a scale
and pace unimaginable only a few months ago. This has allowed citizens to continue
to access healthcare, education, and a range of other public services at a distance
during the pandemic:
• Greater collaboration is needed to allow all public services to be even more integrated.
Therefore, a coordinated digital transformation across Government departments and
for public services is required. This should include putting in place a government-wide
procurement framework where suppliers are vetted and authorised, and should include
a cloud first approach across Government departments. Responding to COVID-19 has
highlighted how critical it is that government employees are enabled to work remotely
within Ireland, and that citizens and businesses can interact digitally across all
Government Departments and agencies, both local and national, allowing public
services to be accessed online by citizens:
• The American Chamber recommends Government produces an annual report on
developments in digital & innovation across the public service with case studies for
each Department / Sector and showing efficiencies made through innovation. In
addition, the American Chamber recommends that 'Digital Leaders' are empowered
within each Department to regularly report to central government on how policy
objectives are being delivered.
• In accordance with previous recommendations2, Ireland should seek to achieve a
better than 80% digital take-up of “Top 20” key government services; with the ambition
that Ireland becomes the best place in Europe to transact digitally with Government3.
Closing the Digital Divide Ireland needs to take measures to close the emergence
of a digital divide both urban/rural and across our society to remain globally competitive.
This will involve overcoming unequal connectivity to the Internet and ensuring targeted
action to address underserved groups.
The American Chamber believes the lack of basic digital skills within the general
population is a significant barrier at a time when people need to be trained and re-
trained for digital transformation. Ireland ranks in eleventh position within the Human
capital dimension of the EU DESI Index4 and should aim to be within the top ten:
• The American Chamber welcomes the launch of The National Further Education and
Training Strategy5 and calls for appropriate resourcing of its components particularly
those centred on digital transformation.
• A review of the skillsets required to interact with technology at second level is
needed. Areas of improvement includes a focus on transversal skills, critical thinking
and complex learning, as well as the hard skills required to access technology including
increased emphasis on remote learning capabilities.
1
Programme for Government – Our Shared Future p26
2
Cruinniú GovTech Report November 2019 https://assets.gov.ie/42554/9f1238028b8f427facc97bf12a270410.pdf
3
Ireland is ranked 27 in the 2020 UN E-Government Index p51
https://publicadministration.un.org/egovkb/Portals/egovkb/Documents/un/2020-Survey/2020%20UN%20E-
Government%20Survey%20(Full%20Report).pdf
4
https://ec.europa.eu/digital-single-market/en/news/digital-economy-and-society-index-desi-2020
5
https://www.solas.ie/f/70398/x/64d0718c9e/solas_fet_strategy_web.pdf
8• As has been seen during the pandemic, societal problems like isolation and loneliness
- are exacerbated by the absence of digital skills, which have been crucial to staying
connected to critical information, family and friends. AmCham calls for a digital
education awareness-raising initiative to highlight the positive role digital can play and
supports for individuals at all levels to go online.
• The American Chamber sees an opportunity for an appropriate upskilling/re-skilling
national strategy to deal with the rise in unemployment caused by the crisis in rural
areas. AmCham recommends that a national programme of upskilling and best
practice sharing by representatives of the MNC sector to help the domestic business
base enhance productivity growth.
Funding the Knowledge Economy
The knowledge economy with AmCham members at its heart will be a significant driver
of the economic recovery. The COVID-19 crisis, the review of Ireland’s innovation
policies, and new industrial policies at a European level - present an opportunity for
collaborative innovation across the economy. Incentives remain a critical tool to
ensure Ireland is competitive for research, product development and process
innovation projects. This is necessary to compete against other small open economies
to access talent and global innovation leadership in business, science and technology.
R&D Incentives It is vital that Ireland continues to develop its successful R&D incentive
programme benchmarking itself against world leading regimes to ensure that Ireland
remain globally competitive and continue to attract international R&D investment.
Increase Innovation Spending Many of Ireland’s international competitors for
innovation investment have committed to a spend of at least 4% GDP in the area of
innovation. The Chamber recognises that public spending in Ireland has increased
slightly over the lifetime of the Innovation Strategy 2020 but believes this needs to be
increased to match Ireland’s needs and ambition6. We continue to argue that given
Ireland’s ambition, the Government should aim for research expenditure of at least
3% as a percentage of GNI.
Fund Third Level Education Key to the reputation of Ireland as an international
leading location for innovation is the inclusion of an Irish university within the Top 100
universities in the world. Although there are debates surrounding the metrics used
within university rankings; they are a key statistic for corporates assessing the capacity
of a country’s innovation ecosystem.
We support a strategic decision on the recommended funding options outlined in the
report of Expert Group on Future Funding for Higher Education 7 Ireland must make
smart policy choices to fund our higher education and research sector if Ireland is to
continue to develop high-quality research outputs and collaborations. AmCham
believes this will reinforce Ireland’s ability to seek funding from outside the Irish
education system and to attract and retain leading educators to build a world class
talent pipeline. This should also include funding for professorship programmes, and the
expansion of programmes between leading global universities and Irish universities.
6
The Fourth Progress Report of Innovation 2020 acknowledges that Ireland’s research “expenditure as a percentage of GNI*
reached 2.03% in 2017. Ireland now ranks 12th in the EU for R&D expenditure
7
https://www.education.ie/en/Publications/Policy-Reports/Investing-in-National-Ambition-A-Strategy-for-Funding-Higher-
Education.pdf
9The National Economic Recovery Plan
AmCham believes that Ireland’s prospects of economic recovery will be largely determined by its determination to show an
ability for swift decision-making and implementation of these decisions to secure our global competitiveness in attracting
inward investment. The National Economic Recovery plan is a timely opportunity to explain to domestic and international
stakeholders how Ireland will build its economic recovery, including the key policy drivers and key partners. AmCham
believes the best way to achieve this is through an ambitious and clear road-map.
RECOMMENDATIONS
Inward Investment Taskforce An inward investment taskforce, should be created,
led by the Taoiseach with senior Cabinet Ministers and include senior representatives
of the multinational sector with the goal of an economic recovery road-map and
assessment of progress on key priority areas outlined in the road-map.
Balanced Regional Development The American Chamber believes that regional
balance is necessary to provide a viable counterweight to the pull of Dublin as Ireland’s
capital city; encouraging talent to locate in areas with good regional and international
connectivity, good quality of life including access to recreational amenities, local
services, educational facilities and affordable housing:
• The American Chamber reaffirms its view that Project Ireland 2040 is the correct basis
for sustainable long-term strategic growth for the country, with the overarching aim that
Ireland should aim to be recognised as the best place to work and live. Balanced
regional development across Ireland means universal access to digital connectivity and
continuing to plug the gaps in Ireland’s physical infrastructure deficit.
• The American Chamber believes economic development and renewal should be
focused around urban centres of scale, requiring greater urban densification and metro
transport capacity. In particular, the American Chamber supports the work of the
Atlantic Economic Corridor initiative and efforts to capitalise on the substantial amount
of activity and investment now distributed along Ireland’s Atlantic seaboard.
• The American Chamber supports initiatives laid out in the Future Jobs Ireland
framework and the Regional Enterprise Plans to build regional strengths and to connect
and engage SMEs and multinational corporations and local tertiary education
institutions to ensure local human capital can continue to be developed regionally.
National Broadband Plan Implementing the national broadband plan is a vital
necessary condition in our knowledge-intensive economy to avoid digital, and thereby
economic, blackspots. The American Chamber welcomes the agreement on the
National Broadband Plan, particularly in the wake of COVID-19. It is crucial now that
implementation moves along aligned to the most ambitious timeline possible with
certainty of process.”8.
Affordable Accommodation The American Chamber is strongly of the view that the
provision of accommodation is a critical economic enabler that requires
continued prioritisation for planning and capital investment. This is especially true in
Dublin, but there is also a need to increasing the housing stock in all
of Ireland’s urban centres of scale. Dublin ranks as the fifth most expensive city for
rental accommodation in Europe9 The delivery of the Programme for Government’s
housing commitments is imperative for Ireland to remain a location that retains and
attracts world class talent.
8
The National Competitiveness Council points out that “…Ireland also has one of the lowest proportions of fibre broadband
connections in the OECD ‘Ireland’s Competitiveness Scorecard 2020’ May 2020 National Competitiveness Council p54
9
https://www.eca-international.com/news/april-2020/dublin-remains-the-fifth-most-expensive-for-rental
10Brexit Uncertainties arising from Brexit remain a significant challenge for Ireland.
Given the shared talent pools north and south of the border there is a need for
improved physical interconnections in terms of road (A5/N2), rail (high-speed Dublin-
Belfast services), energy and public services (health and education). Interconnectivity
between Ireland and mainland Europe remains top of mind for our members,
particularly in the context of developing alternative routes to Europe from Shannon
and Cork.
Infrastructure AmCham believes Ireland’s prospects of economic recovery will be
largely determined by its readiness for swift decision making and implementation of
decisions to secure our global competitiveness to attract inward investment. The
State’s investment in infrastructure through Project Ireland 2040 will be a key
contributor in this respect:
• Given the increased pressure caused by the crisis, we encourage the
Government to consider alternative non-exchequer forms of financing and
to take appropriate advantage of historically low costs of borrowing on
international markets –recognising that these rates will not be with us
forever.
• We believe that the shocks caused by COVID-19 have changed a number
of the underlying assumptions of the National Development Plan and now is
the time to review the Plan to ensure the maximum delivery of its
objectives. We believe that the focus should be on the existing
commitments including:
Dublin: Bus Connects, increased cycling
infrastructure, Dublin Metro and expanding Luas cross-city.
South/MidWest: Completion of the N28 Cork and Dunkettle
Interchange and delivery of the M20 between Cork and Limerick.
West: Sustainable public transport solution for Galway with
a particular focus on access to Parkmore Industrial Zone.
North West: we support attention that the Northwestern region
received in the National Development Plan. The region is not well
connected to Dublin or international airports. The development of
the A5/N2 between Derry and Dublin remains the priority for our
members in the region.
International connectivity Members highlight the importance of
international air and freight connectivity through regular
transatlantic routes as well as connections to key European
hubs. In particular, US pre-clearance facilities at both Shannon
and Dublin airports are of key strategic importance.
Planning and Land Development AmCham is calling for adequate funding for the
Land Development Agency and the Office of Public Procurement to ensure that the
delivery of housing commitments. Measures to encourage the pooling of planning
resources between local authorities, the acquisition of expertise to deal with planning
bottlenecks and the renewal of the Strategic Housing Development Scheme would be
strongly welcomed by American Chamber members.
11Review Planning Policy It is essential that robust and efficient public decision-
making underpins the Government’s ambition aligned with the country’s economic
model. The American Chamber is supportive of a comprehensive review of Ireland’s
disparate planning legislation to produce a consolidated Planning Act by the
Department of Housing to ensure certainty of process and improve the efficiency of
Ireland’s planning system.
Sustainability Roadmap The Chamber fully support the Government’s ambition to
transfer to a carbon neutral economy by 2050. Many of our members are aligned to
more ambitious sustainability targets. The transition to a carbon neutral economy will
require a whole of society approach, impacting on how all of us live and work. We
would welcome a national dialogue, involving all aspects of Irish society and the
economy, on how Ireland should best implement the various aspects of the EU’s
Green New Deal. Furthermore, the Chamber is calling for a comprehensive and
inclusive roadmap outlining how each sector will adapt to sustainably contribute
to Ireland‘s emissions targets. Sustainability and the promotion of the circular
economy should be at the heart of policy decisions affecting all sectors of the
economy and should be a consideration in all state funded activities.
Sustainable Public Transport The American Chamber believes there is need for a
modal shift in public transport to encourage increased use of sustainable methods of
travelling to work. For the new policy to be a driver of change, significant emphasis
should be placed on future modes of transport and technology innovation. The
Climate Action Plan’s target of 180,000 electrical vehicles on Irish roads by 2025 and
946,200 by 2030 needs to be aggressively pursued. Although the Climate Action Plan
does not mention hydrogen technology, and other alternatives, the mobility policy
should have enough built-in flexibility to react to the rapidly evolving low emission
vehicles and autonomous vehicles markets.
Renewable Energy We encourage significant alignment between all policies linked
to the carbon neutral economy and future planning frameworks to encourage the
transition from fossil fuels to renewable fuels. For example, the renewed mobility
policy should ensure there is enough renewable energy to meet growing demand of
electrical vehicles; through key infrastructure projects such as the North-South and
Celtic Interconnectors and the speedy delivery of a Maritime Planning Framework.
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