Budget 2020 should steer economy in a new direction
Ibec, the group that represents Irish business, today launched its Budget 2020 campaign at which it called on Government to take the brave and necessary steps to protect the Irish business model as the Irish economy enters its most strategically important period in a generation.
Commenting, Ibec’s Director of Policy and Public Affairs Fergal O’Brien, said: “Ireland’s business model, which has transformed the country over the past six decades, is facing into a period of significant challenge. This challenge is being driven by three fundamental shifts in our business environment: there are significant risks to our FDI model from change underway in the global tax environment under the OECD/G20 Base Erosion and Profit Shifting (BEPS) initiative; the global trading environment is becoming more difficult for small open economies; and Ireland’s relationship with our nearest neighbour is changing irrevocably.
“The Exchequer has received a €14.3 billion corporate tax surprise over the past four years, but we haven’t used this revenue wisely. Budget 2020 must chart a new course; we must reinvest the fruits of enterprise success into infrastructure, innovation and education and not embed it into the day-to-day cost of running the country.
“In the first instance, Budget 2020 must deliver on measures to grow our indigenous enterprise base. This includes an intense focus on productivity, innovation, skills, and exporting early. Given the wide range of imbalance and uncertainty in business, personal and environmental tax, we also think that it is time for Government to set up a new Commission of Taxation to ensure that the tax system is sustainable in the decades ahead.
“Furthermore, when it comes to our international competition there are significant risks to our tax advantage for mobile investment. The Government must take steps to radically improve the non-tax elements of our regime if we are to continue to prosper.
“Finally, Ireland has a history of focusing cuts on productive spending during any downturn. Business is already concerned that progress is slipping in the delivery of the Ireland 2040 Plan. We must invest ambitiously, identifying new projects where needed, and deliver on committed projects as urgently as possible.”
Ibec’s Budget 2020 submission calls for a range of policy measures including:
- We need to build on our progress by nurturing indigenous business: The Government should build on the State’s traditional success in attracting foreign direct investment (FDI) and take concrete steps to grow our indigenous business base. We need to maximise the potential of schemes including reform of Capital Gains Tax (CGT), the Employment Incentive and Investment Scheme (EIIS), the Key Employee Engagement Programme (KEEP) and an SME R&D tax credit.
- Reinvent our offering to multinational firms: The OECD / G20 process of reforming global corporate taxation poses potentially very significant challenges to Ireland’s traditional FDI model. The State needs to radically improve our investment in education, infrastructure, innovation, and tax supports for advanced manufacturing to provide certainty to our business model.
- Address the demands of a rapidly changing labour market as globalisation, digitalisation and changing lifestyles are transforming jobs and careers: Budget 2020 should respond to these emerging trends by addressing key labour market challenges such as inadequate childcare, the under-funding of higher education, and inadequate supports for share option schemes.
- Attract and retain the best talent by improving quality of life: The high cost of housing, long commutes and challenges to the environment are amongst the top barriers to attracting and retaining talent. Budget 2020 must assertively confront these fundamental impediments to quality of life by delivering public infrastructure to match growing private investment. We must urgently address the high cost of development land, effectively tackle climate change and deliver the National Development Plan.
- Deal or no deal, we must get ready for Brexit: The risk of a no-deal Brexit casts a shadow over Budget 2020. The Government must do more to support business, as it prepares for all eventualities. There must be a stronger delivery on Brexit preparation and mitigation measures domestically, including far-reaching stabilisation measures in the event of no deal. In the medium-term, we need a multi-Budget approach to support export market diversification.
Download our full report here Ibec Budget 2020 Submission
Ibec Budget 2020 Priorities
Budget 2020 could be the most strategically important Budget faced by the Irish State in a generation. This year’s Budget day should set the sails of Ireland’s economy determining a more sustainable course.
In a Budget special of the Ibec podcast, our policy experts call on Government to take the brave and necessary steps in October's Budget to protect the Irish business model and sustain our economic prosperity.