Feargal Quinn (Independent) | Oireachtas source

I welcome the Minister and the opportunity to have this debate because in previous years we did not have the opportunity to express our opinion before the budget. There is little doubt that there is a confidence in the country that did not exist before. That confidence has come about because the Government has got the economy back on track. I congratulate it on that. It was not just from cutting costs. Tourism VAT was brought down to 9% and I urge the Minister to consider making sure that nobody touches it unless it is to reduce it further.

It is not popular to say, but one of the concerns I have is that there might be an increase in the minimum wage. It is understandable why there would be a demand for it but it seems to me that every time we increase the costs on employers, there are fewer jobs. It dissuades employers from hiring more staff even when they need them. If there is to be an increase in the minimum wage, there should also be a decrease in the employer PRSI rate. Otherwise, employers will be wary of employing somebody else when there is an increase.

My other concern is about upward-only rent reviews in retail. It is an issue I raised in the House and on which we passed legislation. I know it was a very difficult issue for the Government because we passed it as a majority on all Stages in this House but it has gone no further. The reason, we are told, is that the Government has been advised by the Attorney General that it might be unconstitutional. I urge the Government to pass it through the other House and have the President, who will say that there is a doubt about it, pass it to the Supreme Court. That Bill should be passed and referred to the Supreme Court, on which basis we could get a clear answer. It is damaging retailers throughout the country, especially in Dublin.

I would like to see additional measures in the budget to help small retailers and SMEs. Retail Ireland has called for the Government to make it easy for retailers to succeed online. We are not very good at this. We have not done a very good job on this. The idea is we could offset the cost of web development against VAT costs. That has happened in other countries and we could do something on that. I went into a shop in Estonia a few years ago and there were only two or three people working downstairs. Upstairs there were 11 people working on the Internet and exporting. We can do that. There are some great export businesses working on that basis.

It is also well known that SMEs are losing out when it comes to research and development tax credit. Small businesses do not have the capacity for the paperwork and the red tape to access credit. IBEC is calling on the Government to consider launching credit lite, as it were, research and development tax credit models for SMEs. It is worthy and I support it and hope that the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Gerald Nash, will give serious consideration to it.

I have a concern about automatically increasing costs. I do not smoke. I hate smoking and I disagree with it but I worry that if we increase the cost of cigarettes, all we do is encourage smuggling. I know that smuggling is a big challenge. There is a curve in economics called the Laffer curve which says that if a government increases taxes, it earns less. The opposite of that is that if a government reduces taxes, it sometimes earns more. I do not suggest that we reduce taxes on cigarettes on that basis but I am concerned that when we automatically increase taxes on something such as cigarettes, of which I think we would all approve, we find that we encourage other developments such as smuggling.Revitalising town centres is something we can do. The Government must be commended on its recent announcement of a €30 million fund to aid the regeneration of towns. I was involved in the Local Heroes project in Drogheda and it was great to see what could be done. The Austrians set rent for retailers at a low fixed rate to allow small and unique businesses to survive because they attract people into town centres. This is something we could consider doing. The Government also needs to look at ways to encourage people to live in the centres of towns and cities. It should remove red tape and ease the planning regulations.

I wish to bring up another point, which is the extension of the additional voluntary contributions, AVC, scheme past 2016. We still have problems with individuals and businesses getting access to credit. There are various ways they can get it, but one way people and SMEs can get easy access to credit is by releasing some of the cash they have locked up in their pensions. The Minister for Finance was very progressive several years ago in allowing people some access to cash that was locked up in their AVCs. For a three-year period from March 2013, people were able to avail of the scheme, but it will expire in less than a year's time. We can do something about this. It is amazing to consider that up to September of last year more than 12,000 people had availed of the scheme. This meant that more than €90 million was directly released into the economy, while €36 million was paid in income tax. I was disappointed to learn from the Minister for Finance that he had no plans to extend the scheme past 2016. I will take this opportunity to ask the Minister about the future of AVCs. Will the Government consider extending this very worthwhile scheme in the 2016 budget?

While we are talking about business, a number of barriers are in place for those who create businesses. There is discrimination against entrepreneurs. As IBEC has pointed out, the PAYE tax credit in effect allows an individual to earn €8,250 free of income tax but, astonishingly, there is no PAYE tax credit equivalent for self-employed persons or proprietary directors. I do not understand this. That is what we are trying to encourage, but we say if one is self-employed or sets up a business one does not get this benefit. That being said, the effective income tax rates for those who are self-employed are much higher than for PAYE workers at the same level. That is not sustainable. We must change it and it should be changed. There is another 3% USC charge on self-employed incomes over €100,000. This should also be reduced, because we need to set conditions whereby people are not made worse off by setting up or running their own businesses. Most experts point out that entrepreneurs are some of the primary wealth creators in this country. We should not give them a reason to set up their businesses in a competitor country because of outdated tax regimes. Senator Healy Eames spoke about a function she attended in Galway on encouraging development, which was attended by British tax people encouraging people to go to Britain. There were there solely to explain the benefits of establishing a business in the North of Ireland or Britain, as against Ireland. We have competition and we can do something about it.