Looking beyond headline corporation tax receipts to the health of the corporate sector is key Budget 2024 is a first step towards meaningful support for entrepreneurs Use of tax policy as a lever to encourage landlords to remain in rental market will work for society and the economy   High time for childcare to be recognised as part of critical infrastructure     10 October 2023 – Reacting to today’s Budget speeches, Chartered Accountants Ireland has highlighted the importance of supporting enterprise across the country. The Institute represents over 32,700 members, two-thirds of whom work in business.   Supporting enterprise   Director of Public Affairs, Dr Brian Keegan commented  “A healthy corporate sector is critical to Ireland’s economic growth. Without it, the state simply doesn’t have the tax receipts to effect change across so many areas of the economy and society.    “It’s positive to see the focus switching away from the headline corporation tax receipts and the enterprise sector being singled out and supported. These businesses create significant local employment and deserve the support announced today of a €250 million fund to help meet the increased cost of doing business in 2024.   “We hope that the scheme is introduced in a timely manner as businesses are already grappling with additional costs of statutory sick pay, impending pension auto-enrolment and a significant uplift in the minimum wage to €12.70.”  Supporting entrepreneurism   The Institute has also noted the uplift in the R&D credit from 25% to 30% as well as an enhanced capital gains tax relief for angel investors. It states that these measures send the signal that Ireland is open for business and wants to support entrepreneurism.  Dr Keegan continued  “The R&D tax credit has been hugely successful in encouraging research and innovation and creating employment. New capital gains tax reliefs for angel investors should result in early funding being made available to businesses when they need it most – at inception. There have been few new initiatives for the corporate sector in the past decade, and it was positive today to see recognition of the sector to Ireland’s economy.”   Tackling housing  The lack of adequate, affordable, reasonably located housing for staff is one of the biggest barriers to expansion reported by Chartered Accountants Ireland members. The Institute said that today’s tax break of €600, rising to €1,000 over three years, announced for small, private landlords if they remain in the rental market will help to boost Ireland’s housing supply. Cróna Clohisey, Tax and Public Policy Lead said  “Small landlords are an essential feature of a fully functioning residential property market, and properties owned by these landlords are more likely to be in regional, less densely populated parts of the country, providing much needed rental stock in areas that are not as attractive to institutional investors.  “Today’s announcement for landlords will help stabilise the rental market and give more certainty to tenants but also importantly make it more attractive for a small private landlord to enter the rental market. Combined with an increased rental tax credit, the measures will go some ways to helping people access housing, and it will work for society and the economy.”  Childcare as a critical infrastructure issue   Today’s announcement of an increase in the national childcare subsidy (NCS) from €1.40 to €2.14 as well as extending the NCS to certain childminders will help with the cost of childcare but will not address significant capacity constraints within the market.   Clohisey continued  “The cost of childcare is unaffordable for many working parents and today’s announcement to increase the NCS from September 2024 is welcome. However, a survey of our membership last month shows that in addition to cost, the biggest challenge working parents face is a lack of available childcare places.      “While a commitment was made today to address supply issues through core funding, we are asking government to recognise that childcare provision is part of the critical infrastructure necessary for a functioning economy. The crisis needs to be addressed with a long-term strategy with children at the forefront, that adequately funds the sector, increases capacity, and supports working parents.”    ENDS      

The Minister for Finance, Michael McGrath TD and the Minister for Public Expenditure and Reform, Paschal Donohoe TD, will announce Budget 2024 on Tuesday 10 October 2023. We will issue our Budget 2024 newsletter tomorrow evening covering all the main points. You can keep up-to-date with the announcements by visiting the Institute's Budget 2024 landing page.  

Representatives from the Institute, under the auspices of the CCAB-I, met with the Minister for Finance, Michael McGrath T.D and his team earlier this week to discuss CCAB-I’s pre-Budget 2024 submission. The need to simplify the tax system and reduce the administrative burden on businesses was discussed, as were the complexities experienced by small businesses, in particular, when availing of several of the business tax reliefs. The importance of long-term investment in critical infrastructure, not least housing, in order to maintain Ireland’s position as a competitive place to do businesses and also to retain and attract talent was also highlighted.  

9 July 2023 – The success of future generations must be prioritised over short-term measures in Budget 2024, to ensure economic and societal progress in the decades to come. This is according to the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I), the umbrella group which represents over 50,000 professional accountants, as it published its Pre-Budget Submission today.   The submission, entitled ‘Supporting Ireland’s Transition to a Sustainable future’, prioritises the long-term, highlighting that while the Irish economy has doubled in size in the past decade, we still have significant shortfalls in healthcare, housing, transport infrastructure and education. Demographics are exacerbating these shortfalls.  The submission identifies two key areas for budgetary focus;  The introduction of an intermediate 30% rate of income tax to reduce the tax burden on younger workers; and Investment in housing capacity to accommodate our young workforce and our significant FDI community. Commenting, Tax and Public Policy Lead at Chartered Accountants Ireland, Cróna Clohisey said:  “In the absence of a long-term focus, we risk an intergenerational divide becoming a chasm. The half-year Exchequer returns of €41bn published this week highlight more than ever the difficult decisions government faces in Budget 2024. This sum represents an 11% increase on the same period last year, but it is now, when the Exchequer is relatively robust, that government should limit itself to modest budgetary tax adjustments and put real spending power behind sustained investment in infrastructure, particularly housing.  “Our economic position is strong, but it is not future-proofed. There is a real divide between generations in terms of access to housing, pensions security and many other indicators. We need Ireland to be a country our young people choose to stay in and that others choose to bring their skills to, but we cannot do that without long term, strategic interventions in transport, health, and housing.”  Reforming the income tax system  Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues: “Workers in Ireland pay income tax at a rate of 40% once they earn €40,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.” “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. An intermediate rate would also support Ireland’s FDI offering. The government needs to take immediate action to address the inequities that clearly exist within the system.” The submission also proposes: Income tax credits and rate bands should be index-linked to earnings to account for inflation Employers’ PRSI should not be increased The rate of CGT and CAT should be reduced from 33% to 20% The CGT annual exempt amount should be increased from €1,270 to €5,000  The Category A threshold for CAT should be increased from €335,000 to €350,000  The CAT small gift exemption should be increased from €3,000 to €5,000. Housing measures The CCAB-I believes that small private landlords are critical in boosting Ireland’s housing supply, particularly in provincial towns where demand is not sufficient to justify large-scale investment in the private rental sector.  Ms Clohisey continues: “Our members tell us that one of the biggest barriers to expansion is the lack of adequate, affordable housing that is reasonably located for their staff. We do our young people an enormous disservice by limiting their opportunities to live and work where they want to.” “The tax burden of small private landlords should be the same as that for companies at the 25% rate, rather than at the marginal rate of 52%. On the supply side, to enable property developers to manage their cash-flow, a tax debt warehousing system, like that created during the pandemic, could be developed whereby the collection of taxes such as PAYE is delayed until all housing units have been sold.” The submission also proposes: Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work ‘Rent-A-Room’ relief should be increased to match the standardised average rent and the ‘cliff-edge’ for qualifying for relief should be removed. The Rent Tax Credit should be permanently included in legislation. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.