Finance Bill 2015
Thursday, 03 December 2015

During the second stage debate in the Seanad on the Finance Bill 2015, I said: I welcome the Minister of State. I am delighted to have him here. What is particularly pleasing in the finance results that are coming through is that we have a surplus way beyond that which we anticipated, on which I congratulate the Minister of State and Department. I got one piece of advice from Senator Sean D. Barrett, namely, not to forget the shoebox. I asked him what he meant. I am not sure who came up with the shoebox idea. I understand it was Brian Farrell who said when one get a one-off benefit, one should put it in a shoebox rather than spending it or including it in a budget because suddenly it will all be gone. There is a temptation to do that. Let us remember the shoebox and any surplus money we have on that basis...

The debate today was very interesting. I listened to Senators Mary M. White and Mary Ann O'Brien, both of whom are entrepreneurs and started businesses. I remember someone telling me he had huge confidence in anybody who has ever run a business because they lie awake wondering where they will get the money to pay wages at the end of the week. It seems to me that is what the two Senators have done. They spoke of the importance of running a business. The fact that they are both in the chocolate business is very useful.

I welcome the chance to speak on this Bill. I would like to raise some issues relating to business, in particular, SMEs. Part 3 deals with various VAT issues. I would like to see the Minister doing more to help the retail sector, something Senator Mullins mentioned. In particular, we need to make it easy for retailers to succeed online. As we saw with black Friday and cyber Monday, this is where the future of sales is likely to be.

Unfortunately, many retailers are still not very good at getting their business online and, therefore, are missing out on thousands of potential customers from all over the world. I mentioned that I visited Estonia a few years ago. I went into a shop which had, if I recall correctly, three people on the shop floor but 11 people working upstairs trading online all over Europe. They succeeded in doing business on that basis. It is possible to do something. We are missing out on thousands of potential customers from all around the world.

One proposal is that the Government could introduce a measure that would offset the cost of web development against VAT costs. That has happened in other countries and we could do something. Perhaps there is still time to introduce this small, but possibly very beneficial, incentive. It may give those retailers which need to get online the knowledge that they need. It would be at a small cost to the Government and would involve setting the conditions to create jobs in that sector. If this cannot be done now, I hope we will return to it at some point in the future.

Senator Darragh O'Brien raised an issue about which I feel very strongly, namely, the employment and investment incentive scheme, which allows for tax relief on investments in SMEs. In particular, it seems that in the new rules, companies over seven years old will not now be eligible. I do not understand that. Perhaps the Minister of State could explain the reasoning for that. The Government should implement measures to protect established businesses rather than just helping new businesses.

As Senator O'Brien said, banks are often not lending enough. Given that the economy is still relatively fragile, it seems that measures such as the employment and investment incentive scheme should help all SMEs, not just the newer ones. The scheme requires that a qualifying company now has to be a company that never traded, a company within its first seven years of trading or that the funds the company raises must be higher than 50% of the company's average turnover in the past five years. I do not understand the reason for these conditions. Perhaps the Minister of State will be able to explain them.

These changes were not communicated during the budget. They appear to have been agreed only very recently. This proposed change essentially rules out trading SME companies over seven years old, unless they can raise an investment amount of over 50% of an average of five years' recent turnover.  An eight-year old company with a €4 million turnover cannot take in investment unless it raises over €2 million in funds. Most companies simply would not need that funding. The provision has been sprung on us. The thinking behind it needs an explanation and I think it needs to be changed. The Minister of State may say, "Here is the explanation and here is the change we are going to make," and I hope we do make a change. I believe the change can be done through recommendations on Committee Stage. I will e-mail my suggestions to him, because the matter needs careful attention and I know he will give the matter the scrutiny it deserves.

I welcome the Minister of State to the House. I welcome the Finance Bill and the steps that have taken place. In particular, I welcome the success of the tax incentive in the past year. Let us make sure we do the right thing in the future and continue to improve the economy, which would benefit us all.

 

For the full record of that debate, please click here.

 
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