Fianna Fáil Senator Mary White, who co-founded Lir Chocolates in 1987, said that Ireland’s capital gains tax for entrepreneurs should be as close to zero as possible.
In November’s budget, Minister for Finance Michael Noonan reduced the capital gains tax on the sale of all or part of a business from 33 per cent to 20 per cent, a move intended to encourage entrepreneurs to start up more small businesses around Ireland.
However White, who is the party’s Seanad spokesperson on enterprise, jobs and innovation, said that this still left Ireland with an uncompetitive capital gains tax rate in comparison to the UK, which has a rate of 10 per cent.
White told www.businesspost.ie, “We need to develop our own indigenous entrepreneurial culture and the point about capital gains tax that the Department of Finance doesn’t understand is that we’re not competing with the British.”
According to White, Ireland needs to be better than its competitors, and that means having a more competitive capital gains tax than Britain — our main competitor.
She said, “Irish people can be easily attracted to Britain to set up businesses, particularly Irish high tech businesses, to take advantage of that 10 per cent capital gains tax.”
“The government think they’ve done well by changing the capital gains tax, but I don’t see it like that. I think we should be better than Britain. If we want to compete we have to be better.”
“We have to be as innovative for indigenous businesses as we have been on the 12.5 per cent corporate tax rate. On the 12.5 per cent rate we got ahead of the posse and no matter what government has been in place we’ve stuck to it loyally and defensively.”
Such a rate ought to be zero, or as close to it has possible, White said. Such a rate would encourage people to set up more businesses, and more businesses would generate more jobs, she said.
White pointed out that while unemployment was falling, Ireland still has a significant youth unemployment problem. “We have a youth unemployment rate of 9.5 per cent. That amounts to about 37,000 people,” she said.
“Each of those is a human being. When I set up Lir, getting a job changed many of those people’s lives. They had a place to go every day, they had social intercourse, they had people their own age to talk to.”
But given that two-thirds of all new jobs are created by start-ups in their first five years of existence, White said that indigenous Irish businesses should be given the same sort of tax advantages as multinationals.
“We’re delighted and thrilled that we have the multinationals and we have a very sweet corporation rate for the multinationals, but we do need to strengthen our own companies and broaden our own culture to get fa more Irish people setting up businesses.”
By Barry J White