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Opinion 4 things that can be implemented in the Budget to promote economic growth

For Ireland’s recovery is to be truly successful, our growth must be sustainable – and felt throughout the entire country – writes Ian Talbot of Chambers Ireland.

FOR THE FIRST time in many years, there is an aura of expectation surrounding the annual Budget. An expectation that Budget 2015 will signal the end of a litany of ‘austerity budgets’, and mark a new phase in Ireland’s economic recovery. Budget 2015 is being viewed by many as an opportunity for Ireland to build on the positive economic performance of 2014 and to make 2015 a watershed year in Ireland’s recovery. However risks still abound for a small, open economy such as ours and the uncertainty caused by global events completely outside our control cannot be ignored.

We believe that if Ireland’s recovery is to be truly successful, our economic growth must be sustainable, and it must be felt throughout the country. The most effective way of ensuring this is the case is by helping businesses, large and small, to create jobs.

Notwithstanding the positive trend in live register figures in recent quarters, the spectre of a recovery with very slow employment growth looms large. Budget 2015 must have at its core a series of measures to encourage the business community to create more jobs.

It is unlikely that this will be a ‘give-away’ budget. Nor should it be. We recognise that given Ireland’s fiscal position, there are serious constraints in terms of what Government can do to support the business community. Nonetheless, we believe there are a number of measures that can be implemented in Budget 2015 that will have a limited impact on the exchequer, but that will yield significant benefits in terms of job creation and economic growth.

1. Encourage Entrepreneurship

Setting up and building a new business is an incredibly risky undertaking. We are depending on the men and women across Ireland who are willing to take that risk, and invest their savings and time in starting a new business and creating new jobs. While efforts have been made to support entrepreneurs via the Employment Incentive and Investment Scheme and the Seed Capital Scheme, these schemes have seen low take up rates and should be revised to make them more easily accessible and use friendly.

The same can be said of the Credit Guarantee Scheme and we look forward to a promised enhancement to this programme. With a capital gains tax rate (CGT) of 33%, we believe that the risk taken by entrepreneurs is not being adequately rewarded. CGT should be reduced to 20% to incentivise entrepreneurs to take risks and create jobs. Improved support for entrepreneurs will create jobs.

2. Reduce Employers’ PRSI for Class A employees

The rate of Employers’ PRSI for Class A employees earning less than €356 per week is currently at 8.5%. There had been a temporary reduction to 4.25% from January 2011 to December 2013, but the rate has now reverted to the full 8.5%.

This additional cost is proving a significant deterrent to businesses who may wish to take on new employees. It has a disproportionate effect on the retail and services sectors, which are the sectors that we need to create employment in the small towns and rural areas of Ireland. We believe that this rate should again be reduced to the 4.25% level to incentivise business owners to take on staff and create jobs.

3. Encourage Construction in Key Locations

Ireland is in a housing crisis and the current tax regime isn’t helping. The disparity of 13.5% in VAT on the construction of residential housing versus commercial properties is inhibiting the construction of residential developments in key locations as the funding costs are significantly affected. Parity of treatment in both sectors based on the current commercial property rules would make many residential projects economically viable for construction firms and investors.

The 80% ‘windfall’ tax on rezoned land should also be abolished with standard Capital Gains Tax rules applying. A business owner who will receive a tax bill for 80% of any capital gains attributable to rezoning of land will be unable to afford to relocate the business and will therefore be unlikely to sell the land for residential development purposes at a time when suitable sites around urban centres are scarce.

A new stock of residential housing in a number of urban areas will help prevent the spiralling price increases in house prices we have seen of late. Government must prioritise Capital Expenditure, which has been stripped bare with 2013 spending only 38% of the 2008 total.

Finally, the Government’s standard Public Works contract is not fit for purpose and must be updated as a matter of urgency. These measures will not only support the building of much-needed housing but also give a boost to the construction sector and create jobs.

4. Maintain the 9% VAT rate for the Hospitality Sector

The hospitality and tourism sectors are labour intensive and employ significant numbers of unskilled or semi-skilled workers, a section of the labour force that has been hit hard by the collapse in the construction industry. Maintaining the 9% VAT rate will help sustain and grow employment in these sectors. Additionally, the economic returns from this employment are distributed throughout the country, with every county and city having the chance to benefit.

Budget 2015 can be used to drive economic and employment growth. If the economic recovery is to benefit people throughout Ireland, and be sustainable into the future, we must ensure that job creation remains our primary priority. Measures such as the tax relief on the Home Repair Maintenance and Improvement Scheme and the 9% VAT rate introduced in past budgets have been effective and supported job creation. It has been done before and can be done again. Our recommendations made in our pre-Budget Submission will help businesses across Ireland create jobs.

Ian Talbot is Chief Executive of Chambers Ireland.

‘Be business focused not jobs focused’ – government told

‘Don’t try to choke off the recovery with more austerity’

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    Mute Brian Ward
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    Apr 3rd 2015, 7:32 PM

    That’s the problem with todays media reporting of live events, they are all so busy trying to get one up on the other channels that they don’t think for a minute about what they are saying. Imagine hiding out from some langer trying to kill you only for some idiot reporter to come on air and say “oh by the way there’s 4 hostages hiding out in the cold room”!

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    Mute Lad
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    Apr 3rd 2015, 8:58 PM

    If you can get your hands on “the human face of big data”, there’s an interesting piece on how terrorists use data and how in more prolific hostage taking countries it’s now quite common for live selected killings to take place using human search engines and media outlets for info. Or even waiting to carry out an attack to see who is in their area. Next gen terrorism. Off point but interesting.

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    Mute Avina Laaf
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    Apr 4th 2015, 12:28 AM

    Its not just a modern thing – during a ground stand-off following an aircraft hijacking (in the 1970′s I think) special forces had approached the plane via a blind spot to launch a surprise raid on the hijackers. Unfortunately events were being broadcast on live radio and the hijackers were listening in and knew exactly what was about to happen, with disastrous results.

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    Mute David Fitzpatrick
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    Apr 4th 2015, 1:35 AM

    Amen.
    What Globalist Murdoch said about the Sydney Siege comes to mind.
    Bloodthirsty vampire.
    http://www.thejournal.ie/murdoch-tweet-sydney-1836603-Dec2014/

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    Mute Paul Furey
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    Apr 3rd 2015, 7:33 PM

    Good move. Hopefully the media will cop on a bit more. If some aren’t making it up they are getting it all wrong.

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    Mute Brian Ward
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    Apr 3rd 2015, 7:37 PM

    Fox News springs to mind!

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    Mute jenni
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    Apr 3rd 2015, 7:32 PM

    About time the tv media were taken to task, imagine if that lunatic had been watching the live stream and did go down to the chiller they were hiding in…unthinkable acts would have ensued.
    In this day and age you would think tv news channels would have more cop on…but I suppose being more and more sensationalist is worth more than a life in this day and age. How many more lives would have been saved that day if that sick man was not put under the spotlight?
    Its sad really that there is an appetite for this sensationalism.

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    Mute Brian Ward
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    Apr 3rd 2015, 7:37 PM

    Apparently the gunman was watching but must have missed that report. The cop is to blame here as well as he shouldn’t have told the media anything in the first place. With today’s communications it would be easy for any gunman to have someone else watching TV, twitter etc and keeping them informed of what was going on. Best keep the media away from they area and in the dark until it’s all over.

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    Mute Al Ca
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    Apr 3rd 2015, 8:05 PM

    I wonder if that journalist would have been so eager to broadcast that information if one of his own relatives was hiding in that freezer?…..I think not…….which just goes to show how little empathy some journalists have with other people in deadly situations.

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    Mute brian magee
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    Apr 3rd 2015, 11:01 PM

    I wonder what nationality and religion the editor / producer : journalist are?

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    Mute Alan
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    Apr 3rd 2015, 8:40 PM

    It’s like that film Night Crawler. Ratings are worth more to these stations than human lives. Check it out. Jake Gyllenhaal is great in it.

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    Mute Rowan Murphy
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    Apr 3rd 2015, 9:15 PM

    I was thinking more about the reporter from Die Hard and Die Hard 2.

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    Mute miserable now.
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    Apr 3rd 2015, 9:20 PM

    Yes. Just what I was thinking. Great movie.
    Some of these”repoters” are sociopaths.

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    Mute Patrick J O'CONNOR
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    Apr 3rd 2015, 9:21 PM

    Look at the way they vilify Israel for its conduct in the war against Hamas terror,though experts in this field attest that Israel took the most extraordinary efforts to keep civilian casualties at a minimum while Hamas used its own people as shields in some cases. But vilifying Israel feeds the Jew-hatred and sells so ‘to hell with the facts go for what sells’.
    See excerpt from Colonel Kemp’s report
    –Three days ago I spoke to an Israeli pilot that told me that the same morning he had aborted an enemy target a total of 17 times because there were civilians in the target zone, and eventually he abandoned the operation. I asked him, was that not frustrating? His answer was simply no. And that to me, is one of the best things about the IAF – that the last very thing they want to do is bomb a target and have that on their conscience for the rest of their lives. And it was the same thing with infantry soldiers. I spoke to soldiers who have been fighting in Gaza, and several of them said to me: ‘We know what the rules of engagement are but even without them, it is always on our minds that we cannot kill civilians.’ See for them, this has nothing to do with orders, it’s just always there at the forefront. We’re talking about [reservists who are] simply artists, metal-workers, musicians, they are not killers. They have absolutely no desire to kill civilians. In fact, in terms of civilian casualties, the attitude of IDF solders is the exact mirror image of the way they’re portrayed to the world.
    http://www.algemeiner.com/2014/07/30/col-richard-kemp-israeli-pilot-aborted-gaza-strike-17-times-to-protect-civilians-jewish-people-should-be-proud-of-the-state-of-israel-interview/
    Happy Easter All!

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    Mute Elias Khoury
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    Apr 3rd 2015, 10:57 PM

    Truly and accurately stated. You’ll get red thumbs galore, no doubt, Patrick, but that just goes to show that many people don’t like the truth messing up their paradigm.

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    Mute Patrick J O'CONNOR
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    Apr 4th 2015, 2:11 AM

    @Elias Khoury! Thanks for Elias’ sentiment. Your prediction was so but not so bad and some of them even red-thumbed Elias to spite me.Laughable isn’t it!
    I worry not but to speak the truth as I see it. People have a very healthy scepticism about the newsmedia here and it’s just a matter of time before they cotton-on to the con-job the Hamas/PLO and other Jihadders have pulled on them via the self-seeking media.
    Additionally, Jew-hatred is on the wane however imperceptible it seems.
    Happy Easter…

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