Mr. Eoghan Quigley:

What we are looking at are targeted approaches to supporting enterprise. Deputy Quinlivan referred to the comments of members of Cork Chamber of Commerce on tax cuts. We had similar comments from our members, who would prefer investment in infrastructure and housing to tax cuts. There are different forms of taxation. Our income tax regime is broadly based and highly progressive. When it comes to corporate taxes, our key ask is to apply a lower tax rate, of 20%, to certain types of gains.

We have sought to target those in areas that will help to broaden the economy. Irish entrepreneurs are subject to a tax of 33% on all gains. The UK, our closest neighbour, has a 10% tax rate applying to gains of up to €10 million. We feel that is a disadvantageous net position. Increasing our entrepreneur relief up to, say, €15 million, is based on a static costing model. It has been found before in the past that when capital gains tax rates were reduced by a Fianna Fáil Government and the then Minister, Charlie McCreevy, the capital gains tax take actually doubled.

Reducing capital gains tax brings it back into being subject to tax. When entrepreneurs sell their businesses and structure it in a way that capital gains tax arises or does not, they can choose to stay in Ireland, reinvest and be serial entrepreneurs or go abroad and not pay tax here at all. When we talk about tax reductions, we are talking about targeted tax reductions to help stimulate and support a small constituency that is contributing to the broadening of our base. What we have done brilliantly in this country over the past 60 years is to embrace foreign direct investment, FDI. There are many headwinds in that space. We are trying to focus on being proactive in supporting our indigenous entrepreneurial bases. With the headwinds coming in with international tax changes that will run against Ireland, we will have to embrace what we can control. We cannot control international tax policy changes but we can control how we treat our domestic entrepreneurs. The targeted measures we are looking at are improving entrepreneur relief and as, Ms Mary Rose Burke said in her opening statement, applying a lower rate to investment in small and medium-sized companies. That is designed to focus activity in active companies that are contributing to employment and the robustness of our economy. While they are reductions, we feel they are productive and focused which, based on experience, would yield more tax than net costings.

Ms Mary Rose Burke referred to the potential phasing in of some of these measures. Since there is some fiscal space in the current environment and the experience of capital gains tax reduction yielding more tax, we suggest there is merit in embracing these changes and seeing what impact they have on the economy.

There are other certain measures on which we have focused such as research and development tax credits, along with an upfront cash refund to small and medium-sized enterprises that are always in a desperate need of cash. That latter proposal is costed at €30 million but would be stimulative.

Particular aspects of the special assignee relief programme, SARP, have been referred to and have been widely covered in the media, with uses of it to deal with high wages. Our submission proposes applying SARP to small and medium-sized enterprises that are seeking to compete with the multinational sector. The latter are exciting and brilliant companies that can offer their employees share options, large remuneration packages and job security. Jobs in the SME sector cannot advertise in the same way.

Sorry, I am jumping around slightly. We have referred to some measures to improve the KEEP regime to make it more applicable in helping to attract employees into those SME areas, but on the SARP side there is a war for talent in our city. We are in very good economic condition but, again, the multinationals have the ability to pull in foreign talent, which helps develop and embed their businesses in Ireland. What we are asking for is a level playing field for our SMEs to bring in talent to help our SMEs get established. The number of people who have availed of SARP at the €1 million level referred to would be relatively small. SARP is a very valuable relief for many businesses. In looking to apply it to SMEs, I would say very few if any SMEs would look to pay people in excess of €1 million. SMEs are looking to bring in key talent, and in getting that level playing field there is a question of fairness and what it can do for the economy in embedding the SMEs and supporting them. That is well worth considering.