Niall Collins (Limerick County, Fianna Fail)
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3. To ask the Minister for Jobs, Enterprise and Innovation the steps being taken to reverse the continual fall in Irish business competitiveness levels and making Ireland an attractive location for businesses, particularly Ireland’s competitiveness standing with the UK. [39275/16]

Niall Collins (Limerick County, Fianna Fail)
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What steps are being taken to reverse the continual fall in business competitiveness levels and make Ireland an attractive location for businesses, particularly in light of Brexit?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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Ireland’s competitiveness performance has been central to the recovery in employment. Since 2011, Ireland's competitiveness as measured by a range of international indices has improved. Ireland moved from 16th to seventh in 2016 in the IMD’s world competitiveness yearbook, which benchmarks the general environment for business. We moved from 24th to 23rd in the World Economic Forum's global competitiveness report, which benchmarks the factors driving productivity and prosperity in economies. In addition, the World Bank’s Doing Business 2017 report, which looks at regulations impacting on small and medium enterprises, shows Ireland is now ranked 18th out of 190 countries.

As Minister for Jobs, Enterprise and Innovation, my focus is on improving Ireland’s competitiveness performance. Brexit means we must do more across a wide range of policy areas. We must consolidate Ireland's traditional strengths and address those areas where we lag behind the UK. We are stepping up investment in infrastructure and access to finance is improving. We are reforming our tax system to encourage enterprise and allocating more resources to attract investment and facilitate innovation. I have asked that Enterprise Ireland intensify its work to improve firm level competitiveness through its management capability and development programmes such as LEAN.

I will bring the National Competitiveness Council's competitiveness challenge report to Government shortly. Further actions and reforms, driven by the Action Plan for Jobs, will enable us to improve our competitiveness performance, ultimately helping us to achieve our objective of sustainable full employment.

Niall Collins (Limerick County, Fianna Fail)
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The attempt by the Government to claim competitive levels are improving is belied by the statistics. The Minister referred to the World Bank's ease of doing business report. That report shows that Ireland's position has disimproved, falling a number of places to 18th position. The Taoiseach has also failed to meet his 2016 target of making Ireland the best small country in the world in which to do business. Budget 2017 did not contain any measures to close the competitiveness deficit we experience vis-à-visthe United Kingdom. For example, the UK has a much more capital gains tax rate of 10% which applies to entrepreneurial gains of up to £10 million. This is far in excess of the €1 million ceiling that applies to our higher rate of capital gains tax.

The chief executive of the Irish Exporters Association has said the reduced capital gains tax rate does not bring Ireland onto the racetrack, to use his words, when the UK applies a ceiling of ten times the level of our €1 million threshold. Dublin Chamber of Commerce has said the changes will do little to stem the flow of start-up companies moving from Ireland to the United Kingdom. Our capital gains tax rates, particularly for start-up companies, are a major issue which the Government must address.

The British Prime Minister has indicated that the UK intends to reduce its rate of corporation tax to 15%, which would bring it close to the Irish rate. Against the backdrop of Brexit, Ireland has a competitiveness problemvis-à-visthe UK. What does the Government propose to do to reduce costs to business, red tape, the administrative burden, workload and underlying costs to make Irish businesses more competitive?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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We are working with the enterprise agencies to ensure Irish companies are competitive. As I indicated in a previous reply, Enterprise Ireland has contacted its 1,400 companies and is offering them advice on how to become leaner.

Competitiveness is very important. The Deputy referred to a number of statistics. I must take on board what the IMD’s world competitiveness yearbook says, namely, that Ireland has moved from 16th to seventh in its competitiveness ranking. We cannot be complacent, however.

The Deputy referred to the budget and the €1 million ceiling applied here in respect of capital gains as opposed to £10 million in Britain. The Government will examine this issue in the context of budget 2018. I am aware of the issue, which is raised with me in my discussions with businesses.

Niall Collins (Limerick County, Fianna Fail)
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The business expansion schemes were superseded by the employment and investment incentive scheme, which provides individual investors with a tax relief of up to 30% in respect of investments to a maximum of €150,000. In the UK, an investor in a new start-up business can benefit from tax relief of 30% on investments of up to £1 million.

The problem for entrepreneurs is that if they set up a business in this country and it is successful and they want to sell it, they will be penalised by capital gains tax. This disincentive is leading to entrepreneurs choosing to set up a business in the United Kingdom. Similarly, the UK authorities' incentive strategy which allows people to invest in their businesses is ten times better than what we have. This is what entrepreneurs are saying to us, but we do not appear to be taking it on board or doing anything about it. If we want to reach our targets in the Action Plan for Jobs, as I hope we will, why are we not taking these practical measures?

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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Budget 2017 included capital gains tax measures. It also included measures in regard to the foreign earnings deduction which will help Irish exporters to diversify their markets. We have extended the special assignee relief programme to assist businesses to relocate key staff to Ireland and have increased the earned income tax credit for self-employed taxpayers to encourage entrepreneurship. As the Deputy will be aware, the VAT rate applicable in the tourism and hospitality sector was reduced to 9% to assist the sectors in maintaining competitiveness in the light of recent currency movements. The sum of €150 million has been provided by way of flexible low cost finance to aid Irish farmers, while we have introduced income averaging in the agriculture sector to help in dealing with the expected volatility in demand. A further €119 million is being provided to boost the development of the agrifood sector. To be fair, the Government did respond in budget 2017 to the concerns expressed. We will continue to respond to the concerns being expressed by exporters.