Mary White (Fianna Fail)

I am delighted to welcome the Minister and it was a pleasure to hear his exemplary speech yesterday. Despite the ranting and raving from the other side of the House, there is no doubt the economy is beginning to grow and thrive again. I am completely optimistic on that front. My job as a politician is to inspire hope in people.

As a business person, I would like to raise the issue of the abolition of the tax exemption for income received by an individual or company from a qualifying patent. The tax exemption for distributions made by companies from exempt patent income has also been abolished. This measure was announced on budget day and was also included in the list of tax expenditure set out in the national recovery plan for abolition or restriction. The abolition of the exemption applies to income from a qualifying patent which is paid on or after 24 November 2010, which was the date of publication of the plan. I have spoken to the Minister of my disappointment that we were not able to prevent the abolition of this exemption. I hope the new government, of which I hope Fianna Fáil will be a part, will carry out a cost benefit analysis on section 26 and the abolition of patents.

The sudden abolition of this exemption has serious negative implications for the future investment plans of SMEs at a time when we should be encouraging them to invest in innovation as part of our economic revival. As I have said many times, innovation is the name of the game with regard to creating employment, increasing exports and getting growth. The continuation of the patent exemption scheme was recommended, with some modifications following the only specialist study carried out, namely, the Goodbody economic consultancy study of February 2007. The Government innovation task force of March 2010 also specifically recommended its continuation. The commission on taxation recommended abolition, but adduced no evidence to support its conclusions. Rather than abolish the royalty and patent scheme entirely, I suggest the new government should arrange a cost benefit analysis and restrict the scheme so that it remains as an incentive to the SME sector to invest in research and development. Research and development involves risk and companies, because of the lack of cash flow from the banks, need as much investment in that area as they can get.