Áine Collins (Cork North West, Fine Gael) | Oireachtas source

I welcome Mr. Murphy and Mr. Talbot. We welcome all suggestions about how to create jobs and make the SME environment far more friendly. We are familiar with the proposal regarding housing. We hope something will happen in the budget. I would like to mention an interesting statistic in that regard. The building sector is worth approximately €8 billion at present. If that figure increases by €1 billion, some 10,000 jobs will be created and the Exchequer will receive €500 million in tax returns. That is a no-brainer. We have to ensure we do not encourage growth in the black economy. We must ensure the advantage of any scheme is confined to builders who are tax registered and tax compliant.

I do not understand the proposal to allow corporation tax to be offset against other taxes. I should understand it because I studied tax for long enough. As I understand it, start-up companies are currently exempt from corporation tax up to approximately €1 million. I am not sure how this tax can be offset against VAT and PAYE. Small and medium-sized enterprises are supposed to collect VAT, hand it over to the State and offset it against their own tax. I also have concerns about how the payroll aspect of this proposal would work manually because it would affect people's PRSI claims. I think the capital gains tax proposal is a great idea. We need that. The more movement we have on that, the more innovation we have.

My biggest issue relates to the whole area of soft supports. I do not see anything in this regard. From what I am hearing on the ground, SMEs are constantly calling for supports of this nature to help them to access information and new markets when they are trying to develop their businesses. We could do a much better job in that regard. I am sure the delegation welcomed this morning's announcement by the Minister, Deputy Bruton, that €21 million is to be committed for research and development under the competitiveness fund. I do not think we are doing half of what we need to be doing in research and development. We need to increase threefold, at least, our current level of investment in this area. According to the EU, we need to increase our current investment, which is approximately 1.15% of GDP, to approximately 3% of GDP by 2020. That is very interesting. When the US had its biggest economic crisis in the 1930s, it poured money into innovation and research. We could learn some valuable lessons from what the US did to pull itself out of the depression. It is obvious that Europe is still very sluggish. We are particularly concerned about France. If there is no lift in an area that comprises 40% of the global economy, we will have a problem in Ireland. Innovation is still a big issue.

The seed capital and investment incentive schemes have never worked. They are fantastic, but there is a big blockage in this regard. We need to make them simpler. I wonder whether Chambers Ireland could look into that. I know the Irish Taxation Institute will be in. There seems to be a blockage with regard to these schemes. They need to be open to everybody. They need to be made far simpler. Under the seed capital scheme, one has to spend the money before one can get it back. Perhaps there is another way of organising it. I ask the delegation to consider this aspect of the matter and come up with some ideas on it.