Mr. Paul Dillon:

I thank the Chairman and members for the opportunity to present some of CCAB-l's pre-budget recommendations. My name is Paul Dillon, I am a partner in tax practice and I chair the CCAB-l's taxation committee. I am joined by Brian Keegan, director of tax with Chartered Accountants Ireland. In addition, some of our colleagues are in the gallery.

CCAB-I is the somewhat unwieldy title for an association of the four main accountancy bodies in Ireland. Our 40,000-plus members work in all sectors of the community. We are a young profession, with the vast majority of our members being under 45 years of age. We derive our recommendations from the knowledge and experience of our members. Our emphasis in our pre-budget submission is in the area of taxation rather than that of public expenditure. We see one issue as being paramount in the context of budget 2014, that is, tackling unacceptably high levels of unemployment. In economic terms, we estimate that every job lost give rises to an annual cost of at least €20,000 in both income tax foregone and social welfare benefits paid.

We believe that key to fostering employment recovery is the recovery of the small to medium-sized enterprise sector. This sector employs more than 70% of all employees and has been particularly badly affected in the downturn. We need to get investment flowing into the sector. Members of this committee know better than most the difficulties of the banking sector and hence the lack of capital flowing into Irish business. There is an understandable reluctance - given the experience relating to property reliefs in the past decade - regarding the continued use of tax reliefs to drive behaviour in our economy. We believe, however, there is still a role for carefully targeted and managed tax reliefs. Accordingly, we have made recommendations for tax reliefs in key areas in order to make it more attractive for Irish investors to invest in Irish companies, rather than leaving money in less economically productive investments, and make it cost-effective for employers to retain key employees who contribute to innovation in their businesses. Good tax reliefs can still be effective as policy instruments. We have seen the benefit to which a reduction in the VAT rate for the tourism industry two years ago gave rise. Among all the other service sectors, the tourism industry has done well in retaining and sustaining employment.

The bad employment situation in the country would be much worse were it not for the success of IDA Ireland in continuing to attract investment and jobs from abroad. While tax is not the whole story, the Irish tax regime remains an important component of IDA Ireland's offering. We feel that the accountancy profession has the expertise to bring useful ideas to the budgetary process and debate. We again thank the committee for the opportunity to present some of these ideas.