I thought I might update you on some key developments from the past week.
Last Thursday night the Taoiseach addressed an audience of over 700 business leaders as Ibec welcomed its new President Edel Creely of Trilogy Technologies. The Taoiseach used the occasion to deliver his most substantial economic policy speech since coming to office and I will briefly highlight some of the key take-aways which demonstrate the effectiveness of Ibec’s recent lobbying campaigns.
On personal tax reform, he stated that Government would abandon its plan to abolish the USC and would instead merge with PRSI over time and, more importantly, focus reform efforts on reducing the effective tax rate for middle income earners. We expect to see the entry point to the top rate of tax increased in Budget 2018 and further improvements delivered over the coming budgets. This has been at the core of Ibec's tax reform campaigning and the policy is a welcome change of direction from Government.
While the reference to zero hours contracts in the speech dominated the media's post mortem and we will continue our work with government on the details of this proposal, it was by no means as significant as other issues addressed in the speech. Most notable was the lengthy statement on the intention to increase capital investment and commit to launching an ambitious new 10 year investment plan, together with the National Planning Framework, before the end of this year. He said that the plan would ‘bring about true balanced regional development in Ireland’ and set out particularly ambitious growth targets for the regional cities. Subsequently, Government has this week launched the draft National Planning Framework and Ibec's initial assessment is very positive on both its ambition and strategy. Increased capital investment for Dublin and the regions is one of our three priority campaigns for this year and I believe the plans due to be finalised in December will see a successful culmination of our work. We now have a six week window to provide further input to Government on the more detailed aspects of the draft plan and we will be engaging directly with members through our regional and policy committees on this.
This week also saw further detail published by the Trump administration on US corporate tax reform. I believe that the proposed reforms will be good for US business and hence largely positive for Ireland’s globalised and open economic model. While many specifics, such as how the reforms can be financed and the ultimate impact on the effective tax rate, have yet to be worked out, we do expect to see reductions in the headline rate and important changes to how world-wide income of US corporates is taxed. We will continue to follow the details closely and ensure that all stakeholders, at home and abroad, understand the substance of the Irish business model.
As always, I am always keen to hear back from you on these issues or other matters which we can support your business with.
Hope you have a good weekend.