Seán Sherlock (Cork East, Labour)

There are measures in the Finance Bill that are laudable, such as the welcome measures to encourage companies to invest in environmentally-friendly equipment. The measures under the save as you earn scheme are also a step in the right direction. The health measures, such as the VAT reduction on non-oral contraceptives, including condoms, do not go far enough. It is our contention that the Minister should have further reduced the rate to 5%, in line with the EU VAT directive.

I will specifically refer to the research and development tax credit. The Minister should fix indefinitely 2003 as the base year for availing of the tax credit. The Bill, as I understand it, extends the base year of 2003 for the purposes of the research and development tax credit for a further four years to 31 December 2013. However, the Bill provides that the subsequent years' expenditure, for calculating the incremental spend, will be the ten years before the end of the relevant accounting period. For example, 2014 will have a base year of 2004. One can compare this to the UK position, which is based not on an incremental position but on all research and development spend. This gives the UK a comparative advantage so we should consider adopting this approach.

If there is a new Minister of State responsible for innovation policy, I assume the Government is giving the notion of intellectual policy and innovation some degree of stature. A gesture such as this would assist many companies and enterprises throughout the country which are increasingly endeavouring to heighten research and development spend.

Considering the matter vis-À-vis foreign direct investment and its current unstable nature, we will have to rely on many indigenous industries. Much work is being done within universities and third level institutions, and many spin-off companies are established from that and through venture capital. Research and development will increasingly be a component of this process so we should incentivise it where possible. Fixing 2003 as the base year rather than just limiting the credit to 2013 would have provided increased certainty and would have been a more favourable measure.

I will comment on my constituency of Cork East and the relevance of this Bill to such a constituency, where unemployment figures are rising. It has been proven that in towns such as Mallow, Fermoy, Mitchelstown, Cobh and Midleton, the figures are going up year on year. The current Amgen issue——

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