Mr. Ian Talbot:

If one loses money in the first few years and one has a capital gains loss which one can carry forward, my understanding is that some of the capital gains tax would be deductible against, for example, VAT, other taxes due or, dare I say it, rates. Then when one earns one's money and pays one's tax, the amount in question would be offset. It is really a cashflow mechanism - with a cap in place - to assist companies negotiate their early years in operation. I accept that there are incentives in the first couple of years in respect of corporation tax, etc. Some of this comes down to psychology rather than the amount of money involved. We talk to many potential and existing entrepreneurs - people who have established businesses and who are considering setting up others - who are currently of the view that all that is happening at present is that rates are either being increased or maintained. They are certainly not being reduced to the same extent as other costs. In addition, they are of the view that new taxes on employment are forcing them to examine the position with regard to their employees' salaries. Setting up a business is extremely hard work, particularly as the global economy is in such a mess. The mechanism to which I refer is designed to give people something of a psychological boost to the effect that the State is behind entrepreneurs and is offering them a few incentives.

In our critique of the ten-point plan in last year's budget we indicated that too many of the measures did not have much general applicability. They were real niche mechanisms and hardly anyone qualified for them or the changes they introduced were so insignificant that they did not make a difference to anyone. We tried, therefore, to come up with a few more targeted initiatives which could be applied more generally to people establishing businesses. I am not sure that, in general terms, Irish people are disposed to accepting that entrepreneurialism is good. I am of the view that people do not generally make the connection between entrepreneurs and job creation.