Extra €52 million to support job creation announced in Budget
Amidst talk of childcare support, home buyer tax relief and a few extra euro a week in our pockets, one of the key announcements in terms of business in Budget 2017 was the 10% rise in the capital allocation for the Department of Jobs, Enterprise and Innovation.
The rise of €52 million to €555 million, the largest increase in the department’s capital budget in over a decade, will go further to help support job creation, innovation and will support Irish companies in responding to the challenges and opportunities of Brexit.
Minister Mary Mitchell O’Connor says that she is targeting the creation of 40,000-45,000 new jobs in the economy over the next year to continue the positive momentum generated in 2016.
To help facilitate this, both the IDA and Enterprise Ireland have received a boost in funding.
IDA’s capital funding is set to grow by 22% to €137 million. Plans are underway to progress three more new advance facilities in the regions, with new builds planned for Dundalk, Limerick and Galway.
Enterprise Ireland, meanwhile, is set to receive a total capital allocation from the exchequer of €185 million. Spending on general enterprise development will rise 12% to €63 million while research and development supported activities will rise 3.7% to €122 million.
The body are set to roll out a series of competitive regional funds to support collaborative approaches to job creation projects in 2017.
Minister Mitchell O’Connor says: “Budget 2017 is pro-enterprise and pro-jobs. The Enterprise Agencies are currently delivering an extra 70 jobs per day and their supported companies are contributing well in excess of €40 billion euro to the economy annually.
“The Budget contains many measures that will assist business become more competitive and cope with the impact on Brexit… There are also a number of changes to the taxation treatment of entrepreneurs, self-employed and SMEs which are to be welcomed.”
Not everyone, however, shared the Minister’s positive view on the benefits Budget 2017 will give to business.
Here’s some of the main measures relating to business brought in with Budget 2017, and some of the reaction:
- The reduction in Capital Gains Tax was a landmark announcement but many believe that it doesn’t go far enough. While the rate fell from 20% to 10%, this rate remained on disposals of qualifying assets up to a limit of €1 million. Ibec called such tax changes “welcome, but modest”.
- Self-employed people will benefit from an earned income credit of €950, a €400 increase.
- The Foreign Earnings Deduction is being extended to 2020 and the number of qualifying days reduced to 30 days.
- The Special Assignee Relief Programme has been extended to 2020.
- The “Start Your Own Business” scheme was due to expire in 31 December 2016, has been extended for another two years. Under the scheme, an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business; having been unemployed for a period of at least 12 months prior to starting the business. The Government estimates that this extension will cost the state €4 million.
- Our Corporation Tax rate really is sacrosant. Again, it remains unchanged at 12.5%.
- Minister for Public Expenditure, Paschal Donohoe, said that protecting our economy from the uncertainty caused by Brexit was a “key pillar” of this year’s Budget.
The Small Firms Association said the Budget “fails to deliver for small firms.” The Budget may have “tinkered around the edges” but none of the big issues were addressed “head on” and there was “no real Brexit-proofing”.
Conor O’Brien, partner and head of tax and legal services for KPMG in Ireland, called the Budget “cautious and prudent”.
When addressing the changes to Capital Gains Tax (CGT), he said: “While a halving of the CGT rate applicable to qualifying disposals by entrepreneurs to 10% is to be welcomed, there will be some disappointment that an opportunity has been lost to make Ireland more attractive to employers particularly in relation to the relatively low €1 million limit that applies to such gains when compared to the £10 million in the UK.”
Ian Talbot, chief executive of Chambers Ireland, took a tougher stance on the proposals laid out in the Budget. He commented: “There is something for everyone in this Budget but the business community would have liked to see more measures to assist them as we enter an era of post-Brexit uncertainty… the reality is that major concerns for the business community go beyond Budget 2017.
“The big threats to Ireland’s economic development will need strategic level interventions on issues such as maintaining our relative competitiveness with the UK, rapidly expanding our investment in infrastructure and ensuring our export driven economy and exchequer receipts can be sustained in the face of diminishing international demand.
“It is not possible to “Brexit-proof” the economy and as a nation we must stand ready to be as adaptable and flexible as we have been in the past to devise strategies to address forthcoming challenges as they become clearer.”