Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

25. To ask the Minister for Finance the measures that were announced in budget 2016 to support job creation in the retail sector; and if he will make a statement on the matter. [37994/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In the recent Budget I introduced a range of measures aimed at ensuring that, for the second Budget in a row, every income earner who currently pays tax or USC will see an increase in their net income as a result of the Budget package.  These measures are aimed at instilling confidence among our citizens that the economic recovery is under way, which should in turn increase domestic demand and support job creation in the retail sector. 

These measures include the increase in the entry threshold to the Universal Social Charge from €12,012 to €13,000.  In addition, I am reducing the three lowest rates of USC from 1.5%, 3.5% and 7% to 1%, 3% and 5.5% respectively, with effect from 1 January 2016.

I am also introducing an Earned Income Credit to the value of €550, which will be available to those with earned income who do not have access to the PAYE credit.  This will be a significant benefit to small business-owners right across the country including small retailers, publicans, farmers and tradesmen.

Budget 2016 also provided for a tapered PRSI credit, to be introduced with effect from January 2016, in order to alleviate the PRSI step effect across a range of incomes. This will bring individuals into the charge to PRSI on a more gradual basis and will ensure that many low income earners will see an improvement in their net incomes. This will remove a disincentive for employees to supply labour in the range of incomes affected by the PRSI step, which should be of benefit to employers in terms of employee availability for work.

The entry point to the top rate of employer's PRSI is also being increased by €20 per week to €376 per week with effect from January 2016.  This will ensure that the increase in the minimum wage does not result in the weekly income of a full-time minimum-wage worker entering into the higher rate of employer's PRSI. This will ameliorate the cost of the minimum wage increase to retail employers. The PRSI changes are being brought forward by my colleague, the Minister for Social Protection, in the current Social Welfare Bill.

In my Budget speech, I referred to a number of measures which would support retailers and other merchants by reducing costs and incentivising electronic payments. At present, the fees retailers in Ireland face for accepting card payments are excessive. A new EU regulation is halving interchange fees to 30 basis points for credit cards, and the corresponding fee for domestic debit cards will be halved to 10 basis points. These changes significantly reduce the costs of accepting card payments and, combined, these reductions will save retailers an estimated €36 million in fees per year. These changes come into effect on 9 December this year.  In addition, the transaction limit on contactless payment cards was raised from €15 to €30 on 31 of October. 

To support these EU and industry changes, I decided to abolish the stamp duty charge on debit/cash machine cards and replace it with a 12c per transaction charge for withdrawing cash from an ATM, capped at an annual maximum of €2.50 or €5, depending on card type. There will be no charge for debit card transactions.

In Budget 2016 I also announced also a number of measures which, while not specifically targeted at the retail sector, would be applicable there.

The Employment and Investment Incentive (EII) is targeted at job creation and retention and provides tax relief for investment in qualifying SMEs. The scheme allows an individual investor to obtain income tax relief on investments, up to a maximum of €150,000 per annum. Relief is initially available to an individual up to a maximum of 30% of the amount invested. A further 10% tax relief is available where it has been proven that employment levels have increased at the company after 3 years or where evidence is provided that the company used the capital raised for expenditure on research and development. Following changes made in Budget 2016, the scheme is available to the majority of small and medium-sized trading companies trading for under 7 years. SMEs who have been operating longer than 7 years may also qualify, subject to certain conditions.

Also, the three-year corporation tax relief for start-up companies under section 486C of the Taxes Consolidation Act 1997 is being extended to start-up companies which commence a new trade in 2016, 2017 or 2018.

In addition, I announced the introduction of a new entrepreneur relief applying a lower 20% rate of capital gains tax to the disposal of qualifying business assets up to a lifetime limit of €1 million of qualifying gains. This policy is intended to encourage and reward entrepreneurial activity and associated job creation generally.

Finally, I would also advise the Deputy that the recent Finance Bill includes a measure by which an employer may provide an employee with a single annual non-cash benefit to a maximum of €500 without applying PAYE, PRSI and USC to that benefit. I would expect this measure also is likely to act as a stimulus to the retail sector.