I have been proposing a ‘tax package’ to set Ireland apart internationally as a location or ‘save haven’ for businesses to generate significantly more investments in new and existing multinational and indigenous companies exporting.
1. As part of the ‘scheme’ for the 6 Irish banks set up a new fund managed by the banks which would invest in 2009 over â‚¬500 million in export oriented businesses with HQ in Ireland.
Impact : Ireland will be the ‘mecca’ for companies all over Europe and the world setting up and developing emerging knowledge intensive businesses
2. Companies certified by Enterprise Ireland (and Country Enterprise Boards) who have not made a profit due to investment in developing an internationally provide a rebate on Income Tax.
Impact : This would allow these companies survive longer especially where they are finding it difficult to raise funds to develop into a profitable sustainable enterprise with employees
3. Reduce Capital gains on Capital gains for Venture Capital Investment funds where they have a significant operation in Ireland.
Impact : The worldwide expertise in venture capital investment relocates and therefore Ireland is a centre for investment ie ‘Silicon Isle’
4. Promote the Remittance tax scheme
Impact : The best talents will have a tax incentive to reside in Ireland.
5. Reduce corporation to 11% from 12.5% sending a message out to set up business in Ireland by using the quote below to advertise worldwide why Ireland is the best place for businesses.
Impact : Instead of less than 50 new companies adding to the 1,000 MNC’s in Ireland. There would be the potential to add 100’s maybe as many as 1,000 new MNC’s to the list of IDA clients.
As for the banks, the Government could set up ‘Innovation finance units’ in one or more of the covered banks to invest say â‚¬100 million each in export oriented companies. The debt finance could be in the form of convertible loan notes but without recourse to personal guarantees (reason entrepreneurs are not taking on finance for development plans in the current environment).
I feel there is a window of opportunity now for Ireland to show leadership in this area of promoting, developing and financing growth oriented business with the ambition to scale globally selling innovative good and services.
I am also proposing a number of fiscal policy changes which promoted correctly could have a very significant impact on stimulating the economy by generating additional exports and employment opportunities greater than EI & IDA targets.
Set out below is a summary of the potential impact :
1. Increase the number of Multinational Companies (MNCs) trading from Ireland
The source of over 90% of Irish exports is MNCs, the IDA should ‘open the flood gates’ and engage all international, especially European businesses to trade through Ireland generating new jobs and leasing vacant properties. We need more than FDI ‘capital transfers’ for low employment MNCs, the IDA created 9k jobs in 2007 but MNCs lost more – 20% less MNCs in Ireland than 3 years ago. Last year there was 30 new IDA backed companies, so again this year we will probably lose more MNCs than gain new companies. This trend needs to be reversed and can be with some innovative policies and the urgency to ‘promote’ them.
2. Increase the number of Indigenous companies (start ups and scaling companies) exporting and managing operations from Ireland
Future employment and national income will come from Irish non manufacturing enterprises otherwise known as internationally traded services companies. Funds should be allocated to more projects to ensure larger volume of export oriented companies.
3. Provide Funding to the private sector to attract export oriented commercial activity in Ireland
Recapitalising the major banks will not drive more credit where it is needed for the future growth of national income (consumer spend, investment and exports being greater than imports). How about establishing a new bank or fund – “ICC” the ‘Innovation Credit Corporation’, which could provide support to ALL companies trying to develop in Ireland but trade in international markets creating sustainable profits and thousands of jobs.
It seems agencies tasked with Enterprise development don’t grasp the magnitude of some of these problems and where resources should be focused to provide a platform to revive the economy and develop sustainable businesses. For example, â‚¬1 billion allocated to SFI since foundation, Forfas reported â‚¬1 billion spent on state backed R&D in 2008 but EI only have â‚¬400k for 20 businesses partners to commercialise this research. Many say we will ‘benefit’ from the eventual global market upturn. I would question how we can do this without the vision and ambition to address these issues.
In summary, I would propose some easily implementable and ‘quick win changes’ to increase volume of businesses generating export revenue from Ireland and in turn economic activity producing additional tax revenue.
For example, we could put the following in place within weeks :
ï‚§ Promote heavily the fact BES is now applicable to all SME’s in the EEA region with a qualifying Irish operation. Opportunity to attract innovative companies from all of Europe and the world to trade from Ireland.
ï‚§ ‘Income’ Tax remission for ‘start-ups’ as well. Most would have a better chance of developing if did not have to pay income tax in early years as it built value and recurring profitable income from customers.
ï‚§ ‘New Innovation fund’ for international businesses trading from Ireland. Opportunity to capitalise a fund servicing export businesses and become the leader worldwide in financing innovative companies.