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dublin

DUBLIN business
BUSINESS
BUSINESS IRELAND
October 2010 connecting - influencing
connecting | influencing
influencing decisions... Budget 2011 in focus
autumn 2005

What is damaging growth and will damage the


prospects for growth is the perpetuation of the
existing sense of fatalism that hits you like a wall when
you arrive into Dublin.”
– Peter Sutherland at the Dublin Chamber Annual Dinner 2010

Dear Member, yet there is little evidence that agreed


actions have been implemented. Almost
Unfortunately, he is right. half of the government’s deficit could be
met through savings in current expenditure
While Ireland’s recession may be over in identified by ‘An Bord Snip’ and the Local
Gina Quin, Dublin Chamber Chief Executive; Peter
a technical sense, business and consumer Government Efficiency Review Group.
Sutherland S.C.; Peter Brennan, Dublin Chamber
confidence is low; too low for our own good. Therefore, Government must use to full affect President; and Robbie Henneberry, Managing
Uncertainty will continue to persist until such the opportunity presented by the Croke Director, AIB (RoI).
time that clear decisions are taken about the Park Agreement to improve the efficiency
public finances. A credible plan – and one peer and effectiveness of public service through sector to regain lost competitive ground.
reviewed and endorsed at EU level – should outsourcing, the redeployment of staff and the Government needs to take Ireland’s poor
result in a fall in the cost of borrowing and a phasing out of all non-essential services. We competitiveness position more seriously. We
commensurate increase in business confidence. need a public service that is fit for purpose. have proposed that the Minister for Enterprise,
Trade and Innovation sets about implementing
The ‘wall of fatalism’ is an understandable The burden of government on SMEs is of the findings of the NCC as part of his own
consequence of the exchequer’s deteriorating particular concern as the public sector now department’s contribution to Budget 2011.
position and the banking crisis. On the other accounts for half of the economy. The majority
hand, we have not recognised (nor have we of businesses in Dublin are SMEs and they In this newsletter, we outline a number of our
had the drive) that it is possible to rebuild have been the most exposed to the economic proposals to Government and the Department
economic growth on a sustainable basis. In our downturn. Results of a survey carried out by of Finance which we believe would stimulate
Budget 2011 submission, entitled ‘Re-Building Dublin Chamber indicate that 82 per cent business confidence. As a business leader in
Growth’, we champion a plan to balance of SMEs have working capital problems, Dublin, we invite you to communicate the
the books and the needs of businesses, with many struggling to remain in business. specific recommendations that matter to your
particularly SMEs. In our budget submission, we called on the business with your colleagues and to your
Minister for Finance to tackle the working elected representatives, in particular. Now
Over the past two years, the Government and investment capital deficits faced by many more than ever, we are demanding from our
has taken a number of critical and unpopular SMEs through the broadening of the Business politicians a clear economic and budgetary
steps in an attempt to bring the exchequer Expansion Scheme (BES) so that more sectors strategy to bring an end to the uncertainty that
finances into balance. Dublin Chamber broadly can make use of it. We have also called for has persisted for far too long.
welcomed these steps as necessary and the introduction of relief for venture capital
recognises that further significant corrections investors, similar to the UK Venture Capital It is time to talk up the positives of the Dublin
are required over the next four years. The Trusts Scheme. city region.
challenge is to restore balance to the public
finances while not dampening domestic The economy has shown some resilience With best wishes,
demand, particularly as the productive side in the performance of the exporting sector
of the economy is at the limit in terms of the and there have already been a number of
burden of taxation. improvements in competitiveness recorded
by the National Competitiveness Council’s
Comprehensive public sector reform is a Annual Competitiveness Report. Future Peter Brennan
prerequisite for restoring the public finances, growth depends on the ability of the private President

Dublin Chamber of Commerce, 7 Clare Street, Dublin 2. Tel: (01) 644 7200; Fax: (01) 676 6043
BUSINESS IRELAND
dublin business connecting - influencing
autumn 2005
connecting business...
Reducing your rates bill
Last year, after Dublin Chamber’s rates
campaign across the four Dublin Councils,
we saw varying levels of reductions in
the commercial rates charged by those
councils, but the decrease was against
what the authorities initially wanted, which
was a holding of rates.

Next year’s rates will be set this


December and January by the councils
and Dublin Chamber is ramping up its
Above left: William Slattery, Executive Vice President of State Street International Ireland Ltd, addresses the
campaign to see another reduction. It is
Dublin Chamber’s corporate members at the Dinner in Camera. Right: Enda Kenny TD, Leader of Fine Gael,
and Peter Brennan, Dublin Chamber President, at the Dublin Chamber Annual Dinner. rumoured that the Central Government
is looking to reduce its funding of local
Keeping the ‘Competitiveness rate considerations and the increase in the government by ten per cent across the
Fundamentals UK rate of VAT to a rate of 20 per cent will board. Current expenditure of the Dublin
Earlier this month, Irish business consolidate these gains. Therefore, there local authorities is almost €1.7 billion,
representatives from the Dublin Chamber should be no increases in VAT, VRT rates, of which 37 per cent, or €625 million,
of Commerce attended the European excise duty and carbon taxation. Employment is funded by commercial rates. This is
Parliament of Enterprises to debate and taxation levels have risen sharply in recent well above the national average of 27
vote on the issues concerning the future of years, with the introduction of income levies. per cent. Dublin Chamber believes that
business in Europe such as the labour market, commercial rates must drop in proportion
the economic recession, energy issues and The acceleration of corporation tax payments to the Central Government’s reduced
international trade. The representatives for large companies introduced in the contribution to councils. If Government
from Dublin Chamber in Brussels were given Finance Act (No 2) 2008 poses a significant is paying ten per cent less for councils,
assurances that the EU is not seeking to cash flow and administrative cost for large commercial rates should equally drop by
interfere with Ireland’s corporate tax rate. companies. The requirement to estimate the ten per cent.
From their meetings with senior EU officials company’s full year corporation tax liability
and politicians, they were told that Ireland’s six months into the year poses significant This of course will mean that Dublin’s
rate of corporate tax is a national decision challenges for companies. Companies that councils will need to cut their costs. As
and not one that the European Commission believe that their 2010 liability will be less part of this, Dublin Chamber has been
will become involved in as part of the four than in 2009 but are unsure of the final result asked by Minister Gormley to represent
year budget review. feel, in many cases, that to avoid a risk of the business perspective on the recently
incurring interest charges, they should pay announced Dublin Efficiency Review
One of Ireland’s strengths is the transparent the preliminary tax based on the 2009 year. Group. In an exercise similar to ‘An Bord
nature of its taxation strategy. Uncertainty No interest is paid by Revenue where the Snip’, this small group will examine
with regards to corporate taxation will preliminary tax is overpaid whereas interest how duplication and inefficiencies can
jeopardise further foreign direct investment charges will accrue where the preliminary tax be removed from the current system.
and dissuade entrepreneurs from establishing is underpaid – creating an unfair situation. Dublin Chamber will play a constructive
new businesses in Ireland. In this regard, the Dublin Chamber recommends that no role in the group so that the reduced
Minister should reaffirm the status of the 12.5 additional corporation tax payment dates are cost of local government is passed on
per cent corporation tax rate for companies introduced. to all ratepayers.
trading in Ireland.
There is significant international evidence
In its pre-Budget 2010 submission, Dublin that city regions are the drivers of national If Government is
Chamber highlighted the need to stem the economic activity. Thus, if the Dublin paying ten per
losses to the exchequer from cross-border economy is performing sluggishly, so too
shopping, to restore consumer confidence will commercial activity across the country. cent less to councils,
and to secure jobs. Success in our Dublin’s ability to rebuild confidence and commercial rates should
campaigh to reduce both VAT and excise growth is directly tied to Dublin’s competitive
duty has helped to counter the perceived position as an attractive destination to do
equally drop by ten per
attractiveness of cross-border shopping and business, bringing together investment and a cent.”
also to help sustain employment. Exchange talented labour pool.

Dublin Chamber of Commerce, 7 Clare Street, Dublin 2. Tel: (01) 644 7200; Fax: (01) 676 6043
BUSINESS IRELAND
dublin business connecting - influencing
autumn 2005
connecting business...
Cut the cost of Government a quadruplication) of some functions – it is supporting jobs and businesses by reducing
A plan for implementing the Dublin’s citizens and businesses that foot commercial rates and charges. Central
recommendations of ‘An Bord Snip’ and the bill for these inefficiencies through local government must allow local authorities
the Local Government Efficiency Review rates and charges, income tax, VAT and retain some of the savings that they make
Group over the next three years needs to other taxes. from innovations in service provision.
be presented on Budget Day. These reports
have identified a large number of areas The recent Local Government Efficiency
where considerable savings can be made. Review Group report assessed our local
government system and identified cost
savings and additional charges of a
local government mere seven per cent of the total cost of
current spending running local authorities. Dublin Chamber
could be reduced by one recommends that in addition to the
swift implementation of the report’s
billion in five years.” recommendations that each local authority
be given a target to reduce current
Local government in Dublin is big business, spending by three per cent per annum.
with the four local authorities employing If both of our recommendations were
some 10,000 staff and with an annual implemented, local government current
budget of roughly €3 billion. These local spending could be reduced by €1 billion
authorities provide many similar services in in five years. Dublin Chamber believes that Taoiseach, Brian Cowen TD, and Peter Brennan,
areas such as waste, water, transport and dividends from making local government Dublin Chamber President, at the AGM Dinner
in February.
housing, resulting in duplication (actually more efficient should directly lead to

Relief on much needed enhancing and broadening the application


Venture capital
capital for SMEs of the BES by removing the requirements
The Business Expansion Scheme (BES) with respect to the qualifying trades and private equity
provides much needed financial support for which companies must engage in. Such a are vital sources of
small business, particularly at a time when move could assist in alleviating the credit
SMEs are struggling. BES is a tax relief difficulties faced by many firms.
financing.”
incentive scheme that provides tax relief for
investment in certain corporate trades. The A 2006 survey of BES companies conducted per cent on investments up to £200,000.
scheme has taken much the same format by the Department of Finance found just Dividend income is exempt from income
over a number of years because it is a form how important BES is for businesses making tax and the disposal of shares is exempt
of State-aid. Dublin Chamber believes use of it. Without the BES, many companies from Capital Gains Tax (subject to a
that the schedule review of BES should said their working capital position would minimum holding period).
be conducted urgently, with a view to have been dramatically effected and would
have required them to look for financing “Investor confidence receded after the
either through a bank or elsewhere. In such financial crisis,” said Simon Drury of Climate
an uncertain time, this support for small Change Capital Private Equity Fund on the
businesses has never been more important; UK Venture Capital Trust. “Private-equity
the BES is a lifeline to many and needs to firms started to support later-stage
be reviewed in order to allow these companies which are less risky investments.
companies to survive. Venture capital and private equity are vital
sources of financing for the clean-tech
In addition to a scheme similar to BES, sector. Small and medium-sized enterprises
Dublin Chamber recommended that Budget backed by venture capital have formed the
2011 introduce a programme similar to the new generation of clean-tech companies.”
John Hartnett, President and founder of the UK government’s tax relief for investors in
Irish Technology Leadership Group, set out his
a Venture Capital Trust (VCT), which has Dublin Chamber believes that an Irish
vision for how Ireland can emulate Silicon Valley
to foster venture capital here, at the Dublin recently received EU approval. The VCT is VCT would help address the financing
Chamber’s SMART Series on Innovation run in listed on the stock exchange and shares are difficulties faced by many firms in
association with Fujitsu.
purchased by investors, with tax relief of 30 developing their businesses.

Dublin Chamber of Commerce, 7 Clare Street, Dublin 2. Tel: (01) 644 7200; Fax: (01) 676 6043