Good morning ladies and gentlemen,
The budget is a unique opportunity for a government to set out in very practical terms its vision for the future. There are a number of flaws in Tuesday’s budget that need to be addressed.
There are three specific areas I would like to focus on: Entrepreneurship and Job Creation, Childcare Provision and the Inheritance Tax.
First of all Entrepreneurship and Job Creation:
As a co-founder of Lir Chocolates with Connie Doody and Rapporteur of Oireachtas Joint Committee on Jobs, Enterprise and Innovation, entrepreneurship and job creation are very dear to my heart.
Unemployment levels in Ireland are still far too high at 9.4%. In August 2015 the unemployment rate in the UK was 5.4% and in Germany it was 4.5%. For our young people our youth unemployment rate is unacceptably high at 20%. An entire generation risks being permanently scarred.
We founded Lir Chocolates in 1986 when Ireland was in a deep recession, with the intention of creating employment. At that time the national unemployment rate at the time was around 17% with parts of the country nearing 40% unemployment.
I saw first-hand the transformation of young people when they got a job, it isn’t just about the financial gain it is the creation of self-esteem & confidence.
Starting up a business requires 24/7 work. You need to apply yourself as if you are training for a gold medal at the Olympics to succeed, you can’t be staccato. Connie and I started Lir Chocolates in her kitchen and it has since become a global success. After many trials and tribulations, every day was a challenge.
This budget lacks a fundamental shift in attitude towards how we support entrepreneurs.
For example Mr. Brian Caulfied chairman of the Irish Venture Capitalist Association has dismissed the cut in Capital Gains Tax on selling a business from 33% to 20% as irrelevant because it is limited to the first 1 Million euro gain.
He argued that the government should have moved to make the Capital Gains Tax regime much more competitive pointing to the UK.
He points out that the UK Governments Capital Gains Tax rate is 10 per cent and carries a much higher ceiling of almost €14 million euro.
The cap of €1 million here in Ireland will mitigate against entrepreneurs building/scaling a business to a significant size.
Also as you may know a key finding from the Oireachtas report for which I was rapporteur was that there should be an ‘entrepreneurs capital tax’ at a significantly lower rate than the current CGT rate of 33%.
I see that one of the key things that IBEC called for before the budget was the introduction of earned Income Tax Credit for the self-employed and it is good to see that this has been recognised to some extent. However this needs to be increased radically as it is only one third of what an employee gets.
Turning to Childcare, Irish women increasingly want to participate in our economy. We are not utilising half the potential of half the population by not fully supporting women’s participation in the workplace.
The high cost of Childcare means work simply does not pay for far too many mothers and this budget does not address that. In fact Childcare in Ireland is a shambles.
The expansion of the Early Childcare and Education Scheme is not what it seems. This scheme only covers 3 and a half hours per day for 38 weeks so anyone in a full time job will have to pay for other childcare arrangements. This is the same scheme that the Government are talking about introducing in September 2016.
Furthermore, it will do nothing to reduce the childcare bills for parents of toddlers (under 3), who will have to continue to struggle with upwards of €800 per month for a full time day care place, without any respite from the government.
The €64.50 per capita per week fee to the provider by the government for every adequate training and it doesn’t help to provide career advancement. It is not enough to ensure quality.
Thirdly and finally Inheritance Tax, I wish to say that this is an issue that I have worked hard on over the past number of months. Budget changes brought the Inheritance tax threshold to €280,000 from €225,000. Last month I handed into Minister Noonan a petition with over 1,000 signatures. The Inheritance Tax is crippling bereaved people back in my own constituency with many being forced to sell the family home to pay their bills. It is an unfair, anti-Dublin tax. For example, an only child who inherits a home in South Dublin valued at €520,000 would be forced to pay €79,200 in Inheritance Tax. Tuesday’s announcement will do little to address that unfairness. I will continue to fight to address this punitive tax.
This government’s persistence with water charges and property taxes demonstrates its determination to place the greatest burden of taxation on low and average earners. This government prides itself on being “progressive” however it continues to place a disproportionate burden on people with less.
The budget then is missed opportunity to address some fundamental issues. As we gear up for an election I hope that each party will put forward real plans to tackle childcare costs, promote enterprise and reform the inheritance tax. Fianna Fáil will put forward a manifesto on these areas and more which Tuesday’s budget missed.
Thank you all for your attention and I look forward to the Q&A session.