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By Chamber Press Office, 29 September 2020
Dublin Chamber is calling on the Government to reduce Capital Gains Tax (CGT) to 20% for investments in indigenous SMEs.
The Chamber, which represents businesses throughout the Greater Dublin Area, says that a bold new plan is needed to boost investment in Irish enterprise as Ireland tries to reboot its economy following Covid-19 and as businesses face the prospect of a disorderly Brexit.
In its pre-Budget submission to Government, issued this week, 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 said 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.
Dublin Chamber CEO Mary Rose Burke said: “Introducing a targeted CGT reduction like this would send a signal that the Government is serious about growing our SME sector. It 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.”
“At the moment, our 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,” said Ms Burke.
“Our 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,” said Ms Burke.
Budget Must Accelerate Green Economy Transition
In its pre-Budget submission, Dublin Chamber is also calling on the Government to bring forward the delivery timeline for major public transport projects, including MetroLink, the Dart+ scheme, BusConnects and Dart Underground. The Chamber is also calling for 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 & Midland Region Water Supply Project, to stave off the region’s fast-looming water supply issues.
The Chamber’s submission also calls for the introduction of a tax credit for SMEs to allow them to adopt sustainable business practices. The Chamber submission also raises the possibility of increasing the Carbon Tax ahead of schedule if needed to finance these measures.
According to Ms Burke: “We are at a critical juncture, so the new National Economic Plan needs to be ambitious and truly forward-looking. As well as boosting investment in Irish SMEs, Budget 2021 needs begin to accelerate the transition to a green economy. We need to make sure that Ireland emerges from the Covid-19 experience on a sustainable footing. This means preparing our economy for the impact of climate change, decarbonisation, and the circular economy, as well as new ways of living and working.”
The Chamber’s submission singled out public transport and active travel projects such as walking and cycling infrastructure as key priorities in Budget 2021 and the Government’s promised National Economic Plan.
Ms Burke said: “Ireland should take advantage of the positive borrowing environment and the European Green Deal to expedite the delivery of projects like MetroLink, the Dart+ scheme and the Greater Dublin Area Cycle Network. Our vision is that Dublin will become a ‘15 Minute City’ in which all residents have access to good public transport, services, and facilities within 15 minutes of walking or cycling from their home.”
Note: Dublin Chamber’s Submission on Budget 2021 is available here on the Chamber website, along with its submissions on infrastructure and various enterprise supports.