Senator Mary M. White: There are two very important issues which arise. I will be as brief as possible. I want to speak about the budget and capital gains tax. Ireland was innovative when it introduced the 12.5% corporation tax. The beauty of it has been that all Governments, consistently, whatever their composition, supported the 12.5% corporation tax rate. We dare not think where we would be without the multinationals. I have come here today to say that we have to be innovative, as we were on the 12.5% corporation tax for multinationals to come to Ireland. We are too dependent on them. We have to be innovative in terms of our own high-tech entrepreneurs, of whom there are many.
On budget day, the Minister reduced capital gains tax from 33% to 20% on net gains from the disposal of a business or assets up to €1 million. As a business person, I am of the view that we are not at the races on this. I believe passionately that we have to be as innovative with our indigenous entrepreneurs as we have been with the multinationals. The British came down from a 28% capital gains tax to 10% over the last five years because they had a brain drain of entrepreneurs fleeing to the United States and to Australia because they had a better capital gains tax. I cannot comprehend how Department of Finance officials do not understand that although they reduced the rate to 20%, it is not as attractive as the British ones. There is a possibility that many Irish entrepreneurs will go to Britain because of the attractiveness of their capital gains tax rate.
I am coming from the perspective that the success of any business lies in innovation. We have to be as innovative as possible on our taxation systems for Irish entrepreneurs and we have to come down as close to zero as we can. We have to be better than the British because the Irish entrepreneurs will leave the country. I am very upset about this matter because I know it is critical that action be taken. Where will we be if we do not have people setting up businesses? We still have an unemployment rate of 19.5% among young people. That is 37,000 individuals. I meet many young people in an affluent area of the city who have no jobs. They do not have third level education and they are falling out of the system because they have not achieved any serious academic qualifications that will assist them in gaining employment. They are in dire straits.
I am here on behalf of potential Irish entrepreneurs in the high-tech industry, who have very innovative products and have become very successful and very profitable. Ireland’s is a small economy, floating around on the periphery of Europe. We need exporting companies to earn our income. I am starting to feel that many people in this building do not understand that one cannot run an economy on the basis of a services sector. We have to have a productive sector of the economy to make money and keep the rest of the place going. Unless we have people selling goods and growing their markets, we cannot keep the country running.
The officials of the Department of Finance and the Department of Jobs, Enterprise and Innovation would want to get their act together in acknowledging the requirements of being an entrepreneur. The Minister knows as well as I do that being an entrepreneur is quite like trying to win an election in that the work is 24-7. Ms Connie Doody and I worked 24-7 for 16 years in Lir Chocolates. In saying that, I mean it. We innovated day in, day out. If we had said we would wait until the following year to produce a new product in the hope of getting business, we would not have succeeded. We had to innovate relentlessly day in, day out, and week in, week out.
We are not at the races. Ultimately, the politicians are the people who make the decisions, not the officials in the Department of Finance. That said, and I am not being personal in saying this, those officials do not understand what it is like. We need a very innovative capital gains tax regime to encourage people to set up business and Irish entrepreneurs to stay in Ireland. We cannot let them run off to the United Kingdom.
Another point that is very dear to my heart, and about which I spoke to the Minister, concerns inheritance tax. I live in the south County Dublin area where, very quickly in a matter of a week, we got more than 2,000 people to sign a petition on inheritance tax. I do not understand the rationale behind inheritance tax or why the hell we bother with it. People in this country, particularly in Dublin, have saved all their lives for the one little capital asset, but when they hand that property over to their child, he or she must raise the money to pay the awful inheritance tax or sell it. It is communism. I have said this to the Minister before. I do not understand why we would do that to our citizens. I meet people in Dublin Rathdown who are heartbroken because their children will have to pay inheritance tax at such a high rate. I found my own party to be very parochial about this. The threshold should be changed back to €500,000, which applied in 2008. I am not being personal and would not like to hurt the Minister’s feelings because I have respected him so much over so many years but I believe his change to the inheritance tax regime was miserly. It was meaningless. In respect of a house worth €500,000, one only saves an extra €18,000 on inheritance tax.
These are two passions of mine. We really have to grab the issue of capital gains tax for Irish entrepreneurs by the scruff of the neck. I hope the Minister’s adviser, who is sitting behind him, is listening to me because we are not at the races with the British. One has to be better than one’s competition. We have to have a better capital gains tax regime than the British.
Many countries have abolished inheritance tax, including Portugal, Norway, Sweden, Russia, Hungary, Austria, Canada, New Zealand and Australia. It is deemed double taxation. Why are we imposing it? I do not approve of it whatsoever. I meet older people in the Churchtown area who are devastated. They are only copping on to this. They say they have paid off the mortgage on their house, their one capital investment, but that their child will have to pay a very serious tax on it.