Barry Ward (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

10. To ask the Minister for Enterprise, Trade and Employment the position regarding supports for any SME that will not benefit from the planned VAT reduction in July 2026; if targeted supports for small businesses that are facing increasing costs will be considered; and if he will make a statement on the matter. [59971/25]

Barry Ward (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

I welcome the VAT 9 proposal which will come into effect in July of next year. However, I am wondering, particularly in the case of small and medium enterprises that will not benefit from the scheme, if there could be targeted supports for them in respect of increased costs of doing business.

Peter Burke (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

I thank Deputy Ward for this very important question. The Government recognises that the cost of doing business has been an issue for firms in recent years arising from both the wider inflationary trends and Government-mandated changes in the form of improvements to working conditions across a range of areas. It is important to note that costs for firms, as measured through the CSO's wholesale price index, are declining and are down 2.6% in the 12 months to September 2025.

Most recently the Government has taken action to address business costs through the publication of the action plan on competitiveness and productivity and the convening of the cost of business advisory forum, which are both commitments in the programme for Government. The focus of the action plan is on actions that can be taken to strengthen Ireland’s competitiveness and productivity which, in turn, will lead to improvements in our economic performance. A core theme of the plan is regulating for growth and controlling costs, with 18 actions, including five priority actions, focused on addressing this issue. Key action areas include better regulation, which will decrease the regulatory burden for business, addressing Ireland’s high legal costs, and improving competition in our markets. The establishment of the cost of business advisory forum delivers on the commitment regarding supports for small business, enterprise and industries. The first meeting of the forum took place on 11 June with representatives in attendance from across Ireland’s enterprise sector, including SMEs, joined by officials from a variety of State agencies, regulators, and Government Departments. The forum is a tripartite collaboration bringing together a broad selection of representative bodies spanning multiple sectors as well as multinational corporations. The purpose is to jointly consider those issues that can lead to higher costs for businesses in Ireland, any associated regulatory or infrastructural issues that merit a changed approach and those steps that could be taken to mitigate these issues. The forum is scheduled to report to Government in the first quarter of 2026.

Budget 2026 has provided an overall package of €9.4 billion, with €8.1 billion provided for public spending and €1.3 billion for new taxation measures. The latter measures will benefit SMEs.

Barry Ward (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

I acknowledge what the Minister has done in relation to small businesses and business supports. I also recognise that there has been a reduction in the cost of doing business, which is well and good. I support the VAT 9 scheme because it is important to provide that leg-up, particularly for small businesses who need it. The reality is, however, that it is a blunt instrument. It is a universal benefit and, therefore, it benefits those enormous companies and even those large companies that do not need the support. I recognise that it is difficult to construct a mechanism that allows us to give the benefit to one group of companies and not to others but the reality is that large companies do not need that VAT reduction. They will survive. They welcome it but they will survive without it. There are small businesses in every town and village in this country, including businesses in my own community and constituency which have been in contact with me, that need that reduction but they will not get it for whatever reason. They are outside the scheme because they are not providing certain goods. Small businesses are not all getting that benefit but are still facing increased costs of doing business. I am wondering if there could be targeted supports specifically for those small businesses.

Peter Burke (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

First, I would robustly challenge the premise that big businesses in the economy are not good. They employ people. Many franchises provide huge employment in many rural parts of our economy. Let us focus on what we are doing as a Government in the sector the Deputy referenced. First, we increased the PRSI threshold for those on the living wage. We brought forward moderations to the living wage and additional sick pay. We introduced an energy efficiency grant under which businesses get a 75% rebate. We have also extended the 9% VAT rate for gas and electricity to support those businesses the Deputy referenced. We have doubled the innovation voucher to €10,000, again supporting small businesses. We have increased the microfinance liquidity loan threshold to €50,000 for small businesses which will be very important for them. We are also working on an additional loan scheme to provide low-cost finance right into the heart of our SMEs. We have brought forward a change to our research and development regime which benefits small businesses. We also have our SME test which is very much about thinking small first in the context of how changes to statutory instruments and primary legislation affect the smallest businesses in our economy. Those are the areas we want to continue working on as well as on a heap of digitalisation grants supporting businesses to grow more revenue. The Government is very much focused on all of our SMEs and the reflection of that is the growth in our job numbers in our economy.

Barry Ward (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

I acknowledge all of that and in no way want to suggest the Minister is not focusing on SMEs. I acknowledge all of the work that is being done. I know SMEs are the backbone of the economy. The quibble I have in relation to the VAT 9 reduction is that it is across the board. That does not mean that big businesses are not valuable - of course, they are - but they do not need the reduction in the way that small businesses do. We have had this conversation previously and I would much rather see a targeted relief for small businesses. Whether one picks a metric of turnover, profit, number of employees or something else, there is a metric that can be picked to do this. Let us take McDonald's as an example. McDonalds is a franchise and is owned by business people all over the country who run good businesses. They will survive without the reduction to 9%. Next door to them there might be a small café that might not survive without it. The point I am making relates to the cost of this measure. As I have said, I support the measure but in terms of its cost, we would be much better off spending the bulk of that money on the SME sector than on those parts of the hospitality sector that do not need it, the large and very large companies that still provide huge value in the economy but that do not have the same reliance on the scheme.

Peter Burke (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

I note the Deputy's concerns but I have not seen any workable framework under the European VAT directive that allows for differentiation on turnover. I have not seen it yet. I have not seen any workable proposal in relation to that. My point is very clear. There are 228,000 jobs supported in our hospitality sector. Many of them are in regional parts of our country and the vast majority of them, well over 90%, are small businesses. That is why as a Government we have taken a view that we are supporting them very robustly.

We are going to have a new tourism plan next month. That is going to look at numerous issues. The Government is giving the sector a big incentive in taxation now. What is the sector going to do for us as a country to grow as a sector, to create jobs and to grow the value proposition and ensure we can absorb the opportunities presented by tourism? We will be working very closely with the sector. As I said, we will have a new culinary strategy. We are growing the season, growing capacity and ensuring that we develop businesses in this country. This is the key issue. We have a unique opportunity now to really develop the model that businesses operate in, to make them more sustainable and ensure they are in a position to take advantage of the huge opportunity. We are in a very exciting time, particularly for tourism and hospitality. We have a lot of work to do in making businesses viable and this is a viability measure to ensure jobs can be retained. So many workers going up through the system get their first job in hospitality. They learn what it is like to be in society, to work and contribute as they go through. It is very important that we stand by all of those areas.