Paul Coghlan (Fine Gael) | Oireachtas source

I thank the Minister of State for coming to the House to discuss this important issue of a cash basis threshold. I have been told about this matter by business people who pay on a receipt basis because now that their business approaches a €2 million turnover, they must use a cash basis threshold. I refer to small businesses that are trying to grow and recover from the devastating effects of the recession. As we all know, it is Government policy to support small business and undertake measures to further increase job creation, which this issue affects.

It is simple to understand the cash basis. If one has a small growing business and one's invoices approach the €2 million mark, one may not be paid for months. Some invoices might end up as bad debts and not be paid at all. Having to pay VAT on an invoice issue basis will seriously affect the cashflow of small businesses thus affecting job creation, particularly for small businesses located outside of the capital and throughout rural Ireland.

Paying VAT in advance totally militates against growth and job creation simply because it damages cashflow and has a huge negative impact. Is it possible to increase the threshold from €2 million to €3 million? Such a small increase would encourage new employment across the country and VAT would still be paid to Revenue. The only sectors to be affected by the increase would be the small business community and, ultimately, job creation. I have been informed that the measure affects a significant number of businesses and two specific businesses have approached me about the matter. A modest change could satisfy everyone and act in the interest of further job creation. I look forward to hearing from the Minister of State.