Matt Shanahan (Waterford, Independent)
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54. To ask the Minister for Finance the initiatives his Department is considering in terms of tax measures to stimulate access to investment capital given that access to start-up and scaling finance is now the biggest challenge facing the micro and SME communities, as shown in recent surveys; and if he will make a statement on the matter. [21804/23]

Matt Shanahan (Waterford, Independent)
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What tax measures might the Department be considering in the next budget to stimulate access to finance for the micro, small and medium enterprise sector?

Michael McGrath (Cork South Central, Fianna Fail)
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SMEs are the foundation of the economy, accounting for the majority of employment in the State. Their vital importance to our economy is reflected in our programme for Government commitments.

On tax measures, my Department has been proactive in supporting SMEs by introducing and expanding a number of taxation measures, which help small businesses access investment, scale-up and expand. Measures include: the section 486C relief for certain start-up companies; the employment investment incentive, EEI; the key employee engagement programme, KEEP; the start-up relief for entrepreneurs, SURE; and the start-up capital investment, SCI.

Broadly, the section 486C relief provides relief from corporation tax to new start-up companies that have a corporation tax liability of less than €40,000 for an accounting year. The purpose of the relief is to encourage start-up companies in Ireland, thereby creating additional employment and economic activity in the State. Promoting investment and jobs in Ireland is a key part of the Government’s overall strategy, as was recognised when the scheme was extended from three years to five years as part of the Finance Act 2021.

The EII provides a platform for investment in certain SMEs. It provides tax relief for individuals who purchase qualifying trading company shares. The relief aims to encourage individuals to provide equity-based finance to trading companies, to assist companies to raise finance to allow them to expand and create or retain jobs. KEEP allows certain SMEs to engage key staff in a more cost efficient manner. The scheme is a focused share option programme, intended to help SMEs attract and retain talent in a highly competitive labour market.

SURE is a tax relief for entrepreneurs who leave an employment to set up their own company. It can provide a refund of income tax paid in previous years where the individual establishes a new trading company and invests cash through the purchase of shares. I can respond further to the supplementary questions.

Matt Shanahan (Waterford, Independent)
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The Minister and I interacted in this Chamber some weeks ago. Will he confirm, further to that discussion, that the tax breaks he might give to the private rented sector in the budget will be backdated to January of this year, as was requested among measures from the Regional Group?

Access to finance is a huge problem currently in the SME and micro-business space. It is very hard to get money out of the commercial pillar banks. SMEs are paying more than 8% APR. If they are going into linked finance they can be paying up to 14% APR, which is not very sustainable for a lot of businesses. Are there any plans to look at reintroducing a Strategic Banking Corporation of Ireland backup scheme, as was done during Covid?

I am aware that insurance is not quite the Minister's bag, but commercial insurance is a huge problem now. We have not reformed the duty of care legislation yet and the number of claims circumventing the Personal Injuries Assessment Board, PIAB, is rising all the while. I am aware of two companies, one of whom is an indigenous baker, whose insurance premium has gone from €10,000 to €30,000, with a €10,000 excess. The other company is a leisure business whose premium has gone from €50,000 to €250,000 annually for the next five years. These are the problems afflicting the SME sector presently.

Michael McGrath (Cork South Central, Fianna Fail)
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I will start on the Deputy's final point first with regard to insurance. HE will be aware that the Minister of State, Deputy Jennifer Carroll MacNeill, is leading the Government's insurance reform programme. Significant progress has been made on the new personal injury guidelines and the office to promote competition in the insurance sector. The work to reform the duty of care legislation is at an advanced stage. We expect it will complete its passage through both Houses before the summer recess. It will then be enacted. In some respects, that is the final major piece of the jigsaw of reforms in this area.

On the rental sector, I have given a commitment that in the budget I intend to introduce measures to support investment in the rental sector. The precise timing, the nature and the detail of all those measures is a matter for consideration as part of the budget process. I cannot go into any more detail on that.

The Deputy raised the issue of enterprise tax reliefs. I am reviewing these in the context of the budget. While we have had tremendous success, which I believe will continue, in foreign direct investment there is a need to focus on the indigenous economy. Some of these schemes have been very successful, others less so. We need to see if we can improve them to make them more effective. That work is now under way in my Department.

Matt Shanahan (Waterford, Independent)
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I will suggest a couple of measures, one of which is a tax warehousing scheme again this year. I believe a lot of companies are still trading from the subsidies that came through during Covid. They will have a difficult time later in the year. Beyond that, could the Minister consider putting tax credits on utilities rather than looking for a windfall tax that gets to everybody? It would mean that the high users would end up getting a tax credit. They are the ones that are in manufacturing.

Beyond that, perhaps there could be a regeneration of the stay-and-spend tax credit. This was a very difficult scheme to get at, but it was well worth doing because it targeted the restaurant sector whereby people were given credit. Perhaps this could be backdated to this year, not to next year's tax bill, so people could see the benefit.

With regard to insurance, I do not like to highlight any individual cases here, but €145,000 was awarded in the courts during the week for a dislocation of an elbow at an equestrian centre. While those types of claims are carrying on, we will not get any reasonable reform of insurance when payments are still being awarded at that scale.

Michael McGrath (Cork South Central, Fianna Fail)
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In the minute it will not be possible to respond to all those issues but I will touch on tax warehousing because I am aware it is a very important issue for a lot of businesses. At the end of March the value of debt warehoused was more than €2.2 billion across 63,600 businesses. Last October, Revenue announced an extension to the period during which debts can remain parked in the warehouse. This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. This is significant additional time, which will greatly support businesses in their recovery from the impacts of the pandemic. Revenue's expectation is that the extended timeline to 1 May of next year for entering into arrangements for repaying warehoused debt - this is for entering into arrangements, not for having to repay it all by that date - together with flexible payment arrangements, will assist most businesses to work through any payment difficulties.

When I look through the data of the very many of the businesses, the amount of tax they have warehoused is quite low. The bulk of the money is made up by a relatively small number of businesses. As is always the case when it comes to tax issues, the message to businesses is to engage with Revenue. Revenue know the importance of that scheme and this is why they have extended until 1 May next year the deadline by which businesses must have entered into an arrangement.

Michael Ring (Mayo, Fine Gael)
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Before we proceed to the next question, if Deputies are watching the debate, this is the last priority question and if they have questions they need to get to the Chamber.