Ibec launches Budget 2021 campaign
Ibec, the group that represents Irish business, today launched its Budget 2021 campaign (see document below) that calls on Government to ensure that emergency supports, which are due to be withdrawn from the economy in the first half of 2021, are followed by a new stage of policy measures to support the economic recovery throughout the duration of the public health crisis. Ibec’s view is that the continued package of supports into 2021 will need to be in the region of €6 billion.
Commenting, Ibec Director of Policy and Public Affairs, Fergal O’Brien said: “The scale of the challenge facing us from both Covid-19 and Brexit means that the economy will need ongoing support in 2021. The significant, but temporary, income supports currently in place are providing life support to many sectors and jobs across the economy. The Government has provided €20 billion in direct support to the economy in 2020. As those supports are withdrawn, in the first half of 2021, it is important that they are not all withdrawn at once. The economy is not yet ready to carry itself. A new stage of policy measures will be needed to rehabilitate the economy, strengthen our competitiveness, and ensure recovery.
“This new set of economic supports should be based around a comprehensive and targeted Covid recovery package for the worst impacted sectors and a clear plan to help protect sectors worst exposed to a difficult Brexit. The domestic unemployment crisis will require significant further measures to incentivise hiring and investment to get people back to work along with a policy package to ensure our export model is primed to deliver strong export growth in the years ahead. Finally, a longer term suite of measures will be required which are aimed at dealing with key quality of life issues. These include measures to help business adopt low carbon technologies, deliver affordable housing, improve regional balance, support remote-working, and support workers with caring responsibilities.”
Ibec’s Budget 2020 submission calls for a range of policy measures including:
Introduce a Covid recovery package for 2021 and 2022: These measures would include tax measures to encourage investment in and by SMEs, such as a radical improvement in CGT entrepreneur’s relief. Improving the working of the Employment Wage Subsidy Scheme (EWSS) so that firms avoid a ‘cliff-edge’ effect once they hit 70% of normal turnover. And the re-introduction of the 9% VAT rate for hospitality, extended to the on-trade, to provide direct support to cashflow.
Prepare for a no-deal Brexit: The full resources of the existing €4 billion in Brexit contingency set aside for the years 2020 to 2025, any increased tariff revenue, and the EU Brexit adjustment fund must be brought to bear in supporting sectors from the fallout of Brexit. We outline a suite of measures including expanding the EWSS to Brexit impacted companies, introducing State-backed export credit insurance, and direct supports for export promotion and critical investment.
Get people back to work and business investing: Building on the lessons of the last crisis, support should be focused on youth unemployment and severely impacted regions. Measures include funding for activation and hiring schemes, such as JobsPlus, until unemployment falls below 6% and €400m to increase funding for, and recapitalise, higher education. They should also include a new multi-year innovation strategy – including a new Programme for Research in Third-Level Institutions (PRTLI), regional remote working/incubation facilities satellite to third level institutions, and a pro-forma R&D tax credit for SMEs.
Ensure our inward and outward FDI model remains competitive: Dual threats to both our taxation model and our trade openness mean that we will have to work harder as a country to ensure we remain attractive for outside investment. We outline a suite of tax measures which would help improve the incentive to engage in R&D, invest in advanced technologies, and make it easier to hire and retain skilled staff.
Invest in quality of life and the low carbon transition: The Government should introduce measures to help business adopt low carbon technologies, increase the national deep retrofit programme by €300m, introduce a Shared Equity scheme for housing, increase the eWorking tax allowance to an annual equivalent of €1,500, and provide significant funding to assist people with caring responsibilities, or those with disabilities, entering the workplace.