SME's Driving Success Fianna Fáil Policy 2015 by Fianna Fáil Galway

POLICY PAPER: 2015

SMEs DRIVING SUCCESS

JOHN McGUINNESS TD

SPOKESPERSON ON SMALL BUSINESS REGULATORY FRAMEWORK

POLICY PAPER: SMEs DRIVING SUCCESS

FOREWORD Certainly, I guess we could encapsulate the essence of this policy document by remembering Wordsworth’s “The child is father of the man”. Small medium and micro businesses properly nurtured, cleverly supported and carefully encouraged, will generally grow to become businesses that create, expand and employ. But it is the attention they get in the first few years of their lives that makes the greatest impact. The owners of small, medium and micro businesses face challenges every day: they worry about cash flow, take risks, battle with their banks and red tape and stay open all hours in a huge effort to make their dreams real and successful. Inevitably, some fail, but failure is part of the learning process, and many go on to success, having learned from negatives experiences. In all of the journey from conception to success they have to overcome obstacles placed in front of them by lack of state understanding, resulting from its culture of caution and control. The state really needs to understand the risks small business women and men take and the cost of the regulations and red tape that they are forced to deal with. Small businesses across Ireland believe they are over burdened with regulation. This needs to be tackled and regulation should be proportionately applied to such businesses. That involves some risk, but it is a worthwhile risk for the state to take- allowing profitable small businesses to retain more of their earnings will make it easier for them to fund their own expansion.

“If we have people and families brave enough to back themselves by taking on challenges and financial burdens to develop businesses, they should be able to depend on meaningful support and encouragement from the state.”

Fianna Fáil believes that small businesses should be given tax, business rates and regulatory concessions to lessen the burden on their shoulders, particularly during their start up years. Essentially, and in some ways this is already happening, tax take and regulations should be substantially reduced during early years to relieve the financial burden on fledgling companies, after which they could rise slowly as companies becomes profitable. This would not only help Irish entrepreneurs, but would encourage entrepreneurs from other countries to come here, creating a culture that would enhance the reputation of Ireland as a location for businesses large and small.

Of course, all of this will cost the state in the short term, and some companies will fail. But the state too has to take risks. If it is serious about making an impact, it has to accept that mistakes and losses will occur. But nothing is likely to occur if companies are bound in red tape. The state does need to be fully aware that the use of the rule book and the way it enforces is often far too heavy handed and unsympathetic for start-up companies. This creates a barrier to entry for many entrepreneurs, and often

POLICY PAPER: SMEs DRIVING SUCCESS

results in black economy activity and a lack of respect for the state that cost it revenue in lost taxes and the need for policing. I cannot emphasis enough that what owners of small businesses most need from the state, are the qualities that the state wishes to encourage in them: creativity, flexibility, commitment, risk taking and outside the box thinking. It is as simple as that. And if the State can meet that need, it will be quite simple to put in place the easing of tax and regulatory requirements that Fianna Fáil are recommending.

“Fianna Fáil stands for a country that rewards the courage, determination and resolve of those who confront fear and work hard to create and grow businesses.”

Bad taxes and excessive regulation drives out good money, and good people, or act as a disincentive preventing some from starting and others from continuing on the already difficult path before them. Fianna Fáil fully recognises the worth and potential of our entrepreneurs. It wants risks to be taken with the methods used to tax and regulate them; it wants support to be given to them in a more meaningful way; it wants them to be listened to and sympathy and understanding to be extended to them when they stumble. Fianna Fáil recognises that there is a point where caution becomes obsessive, restricting and intimidating and understands the need for regulation that is proportionate to the size of the business and support when companies are starting and therefore vulnerable. Fianna Fáil stands for a country that rewards the courage, determination and resolve of those who confront fear and work hard to create and grow businesses.

JOHN McGUINNESS TD

SPOKESPERSON ON SMALL BUSINESS REGULATORY FRAMEWORK

TABLE OF CONTENTS Summary of Proposals Our vision for SMEs Rewarding and incentivising SMEs Providing direct SME funding sources Promoting entrepreneurship Technology to enhance enterprises Simplifying the regulatory framework Glossary

POLICY PAPER: SMEs DRIVING SUCCESS

03 04 05 11 14 18 20 25

“Our target must be to get Ireland into the top 10 countries for “ease of doing business” by having the correct regulatory environment.”

SUMMARY OF PROPOSALS Rewarding and incentivising SMEs › Create fairer and equal tax treatment for self-employed people. › Extend social protection supports to the self-employed. › Revamp commercial rates to make them work for business. › Extend entrepreneurs’ capital gains tax relief. › Support rather than hinder business succession. › Provide progressive relief from employers PRSI for job creation.

Providing direct SME funding sources › Setup a fully licenced state enterprise bank. › Establish an innovative crowd funding scheme for start-ups. › Use credit unions as a source of direct funding for SMEs. › Enhance the employment and investment incentive scheme.

Promoting entrepreneurship › Promote entrepreneurship at primary and secondary school level. › Develop a skill focused apprenticeship framework. › Introduce a business advice voucher scheme. › Provide a structured mentoring system for entrepreneurs. › Create an online mentoring network to include our diaspora.

Technology to enhance enterprises › Enable businesses to compete in online market. › Develop web-based platforms to support mentoring networks. › Close the net on the shadow economy.

Simplifying the regulatory framework › Enable SMEs access a greater share of public procurement tenders. › Better regulation and reducing red tape. › Consider an independent regulatory scrutiny board. › Examine ‘one in, two out’ rule for small business regulations

POLICY PAPER: SMEs DRIVING SUCCESS

OUR VISION FOR SMEs Ireland’s economy is grounded on small and medium sized indigenous businesses. The health of the sector is vital to that of the overall economy. Every additional job created by a SME results in an immediate gain for the state. There is one less person on social welfare and one more person contributing through taxation. Micro, small and medium enterprises account for 99.7 per cent of all business enterprises in Ireland. Meanwhile, self-employed persons pay higher income tax and PRSI rates than those they employ, while there are no social protection supports if your business fails. This treatment is crippling small business and low income earning self-employed persons who are trying to meet their financial responsibilities every week. Their endeavours need to be rewarded. The Taoiseach often rolls out the line that he wants Ireland to be the best small country in the world to do business in. While the World Bank ranks Ireland at number 17, many other similar scale OECD countries rank higher than us e.g. New Zealand, Finland, Denmark, Norway and Singapore. We need to close the gap to achieve progression here. This paper looks specifically at the barriers holding the SME sector back. Ireland needs to capture a spirit of genuinely valuing small and medium sized businesses and promote entrepreneurship from an early stage. Concrete measures are outlined to stimulate small business start-ups via tax and incentive schemes and proposals to bridge the lack of direct SME credit available. This government has continued a general policy of inequity in concentrating job creation sparsely nationwide. The Department of Finance recently confirmed that “economic recovery in Ireland has been uneven across the country, with the recovery thus far primarily concentrated in Dublin and other urban areas”1 . Fianna Fáil sets out polices in this paper that will stimulate the indigenous economy in every community, giving all people regardless of location, the same opportunity to set up a small business and prosper. Ease of doing business is vital for attracting new participants into the market place, whether they are home grown enterprises or businesses looking to gain a footprint into Ireland. It is also paramount that we have a regulatory framework that permits businesses to flourish. Our target must be to get Ireland into the top 10 countries for “ease of doing business” by having the correct regulatory environment. 1 Department of Finance, (2015), Submission to the Low Pay Commission

POLICY PAPER: SMEs DRIVING SUCCESS

REWARDING AND INCENTIVISING SMEs

Fianna Fáil will: › Create fairer tax treatment by giving an earned income tax credit for self-employed people equivalent to the PAYE allowance. › Extend social protection supports to the self-employed. › Make commercial rates work for business by revamping the current system. › Reform capital gains tax relief for entrepreneurs. › Support family business succession. › Encourage additional research and development expenditure. › Provide progressive relief from employers’ PRSI for job creation. › Ensure VAT reform and supports for business cash flow. The current tax treatment and social protection supports for employees does not extend to entrepreneurs. Considering the evolving world of work, small business owners and the self-employed have been to the fore of taking the risk to create employment after losing jobs in the recession. They have been ignored by this government as it priorities policy towards FDI and concentrating job creation in an unbalanced regional approach.

POLICY PAPER: SMEs DRIVING SUCCESS

Tackling the tax disparity on the self-employed Our tax system should treat people in an equitable manner. Eligible self-employed persons will receive a much lower personal tax credit in 2016 equating to just one third of the full PAYE allowance currently worth €1,650 per annum. This has a particularly stark impact at lower levels of income. For example in 2016, a qualifying self-employed single person on an income of €15,000 will pay over 7 and half times more tax and PRSI as an employee on the same income. This inequity has to be tackled and the unfair treatment of the self-employed, especially those at the lower income level have to be addressed. Fianna Fáil has consistently in opposition put forward proposals to reward our domestic job creators. We supported the recommendation of the Commission of Taxation to introduce an earned income tax credit 2. Equalising fully the treatment of the self-employed and PAYE workers within 3 years is a core policy.

Extend social protection to the self-employed PRSI is regarded as equivalent to an income tax by self-employed people due to the tenuous link between benefits derived and the amount paid. It operates as a significant barrier to people setting up their own business. A large number of people who were formerly self-employed and who are now unemployed are entitled to only a limited range of social welfare supports. The self-employed currently pay Class S PRSI at a rate of 4%. This entitles them to a reduced range of benefits when compared to PAYE employees. To be entitled for Jobseekers Assistance a self-employed person must undergo a means test. This can be time consuming with up to eight months waiting periods in cases. People who fall into the category of self-employed include farmers, professional people, certain company directors, people who run their own businesses and sub-contractors. Extending social welfare protection to self-employed people achieves at least two objectives. It secures a measure of social justice. It also reduces the risk for those entrepreneurs who wish to start up their own businesses by providing a safety net. We are committed to building an indigenous sector based on small and medium-sized enterprises. However, we must put in place structural reforms to do so. Providing social protection support for self-employed people is a must and has been Fianna Fáil policy since Budget 2012.

Our proposal for a voluntary PRSI scheme for self-employed On a phased and voluntary basis, we propose to extend a full range of social protection payments including Jobseeker’s Benefit and Illness Benefit to self-employed PRSI contributors as part of commitment to foster an entrepreneurial culture as well as enhancing social solidarity. Our policy would allow the self-employed to opt into the existing Class A structure, paying the rate corresponding to their income level. They will continue to make Class S payments as they currently do. This additional voluntary payment will equate to 4% for self-employed with income above €356 a week. As part of the programme of extending benefits, we propose that limited recognition will be given for Class S payments made to date by self-employed persons. Furthermore, the self-employed have no entitlement to an invalidity pension and occupational injuries benefits, which employees can avail of from contributing made at the PRSI Class A rate. Currently, Class S PRSI contributions do not count towards social insurance contributions required for eligibility under schemes such as jobseeker’s benefit, illness benefit and invalidity pension. Self-employed persons should have equal treatment as employees do in this area and enable them to contribute to pensions for old age or widowhood should they wish. An extensive information campaign should be undertaken by the Department of Social Protection to highlight the benefits and services available to self-employed people. While the Department of Social Protection were not able to cost the take up of this scheme on a voluntary basis, we believe that it will be revenue neutral. In addition, the social insurance fund is forecasted to return to a surplus of €180 million next year3. 2 Department of Finance, (2009), “Commission on Taxation - Report 2009”, P 104 3 Sunday Times, (2015) “Social fund on track for surplus”, 20 September 2015

POLICY PAPER: SMEs DRIVING SUCCESS

Reducing the commercial rates burden Entrepreneurs and SMEs need predictability in how rates are calculated and more importantly, that they are proportionate and fair. Commercial rates are a major burden on struggling businesses throughout the country. Retailers in towns are being burdened with financing local government to an unsustainable level with local authorities deriving 28% of their finance from commercial rates4. For entrepreneurs hoping to set up new businesses or existing retailers fighting to keep their heads above water, the commercial rates system can be the straw that breaks the camel’s back and render their efforts financially impossible. It is imperative that the government and local authorities work together to establish a revamped system that creates breathing space for retailers in financial difficulty, incentivise new businesses to set up in towns and forms a sustainable base for local authority finances.

Fianna Fáil commercial rates proposals outlined below: › Create a strong self-assessment program. › Give business rate concessions to new local enterprises. › Provide breathing space to struggling businesses. › Rates exemption for childcare facility properties.

Give business rate concessions to new local enterprises Introducing flexibility for local authorities to use discretion in reducing or delaying commercial rate charges against new businesses is a vital power that will enable towns to attract fledging businesses, new ideas and foster a greater sense of entrepreneurism across the country. As old business models change in the age of online shopping, fostering new enterprises to fit new demands will be increasingly important in keeping the main streets of Irish towns alive with commerce. For example in the UK, councils have the power to exempt struggling businesses from paying rates and rural businesses have a 50% mandatory exemption on rates. Empowering Local Authorities to alleviate the burden of rates in specific key sites in towns and for new businesses will serve as an incentive for innovative retailers to set up shop and create local jobs. 4 Fianna Fáil (2015), “Streets Ahead”, Policy Document 5 Valuation (Amendment) Bill 2012 [No. 50 of 2012]

POLICY PAPER: SMEs DRIVING SUCCESS

Provide breathing space to struggling businesses A specific inability to pay clause should be introduced via an amendment to the Valuation Act. This clause, which is standard in valuation procedures in the UK, is a key measure to help alleviate pressure on struggling businesses. It is a central demand of the Irish Employers for Affordable Rates (IEAR) group and their vision for a reformed rate valuation process in Ireland. Putting in place provisions and specific criteria to ensure that eligible businesses benefit from a reprieve in making potentially onerous rate payments will help save struggling retailers.

A strong self-assessment program Self-assessment is the fastest method to speed up the valuation process. However the government’s latest valuation legislation fails to make it the standard procedure for valuation. The excruciatingly slow progress of the re-valuation process undertaken by the valuation office makes this a crucial task in addressing the problems besetting the commercial rates system. Fianna Fáil has introduced legislation to create a legal basis for self-assessment to be introduced across the country5. Effective self-assessment will speed up the process and help businesses that bear a disproportionate burden of local government finance. The “subsequent occupier” clause is a further inhibitor to business. This clause means that a business moving into a property where rates are unpaid (such as in a previous occupier bankruptcy) must take on the unpaid rates. This is acting as a barrier to businesses moving into vacant premises and revitalising derelict retail space on main streets across Irish towns. Removing this clause will ensure that new businesses are not unfairly deterred from setting up in an unused space. Furthermore the efficient utilisation of space will help reduce rent levels, remove unsightly abandoned shop fronts along streetscapes and help create greater footfall and vibrancy in town centres.

Commercial rates exemption for childcare facility properties Fianna Fáil wants to level the playing field for all childcare facilities taking part in the free pre-school programme. We do not believe commercial rates should be levied on any property where the early childhood care and education (ECCE) scheme is provided. Applying commercial rates on these properties is essentially a tax on educational facilities and should be removed. The free pre-school year is designed to support the development and educational achievement of children and we believe this important change in commercial rates would bring a greater level of fairness for the providers of the scheme. In opposition Fianna Fáil has already brought forward legislation to reform this senseless policy and exempt providers from paying commercial rates. In Government we will implement this exemption.

Reform capital gains tax relief for entrepreneurs There is a globally competitive market for start-up enterprises. Currently relief from capital gains tax (CGT) for entrepreneurs works by offering relief to individuals who have recently paid CGT and subsequently invest in a new business, before selling that new interest no earlier than three years after the investment date. The CGT due on this sale is reduced by the lower of either the CGT paid on the original disposal or by half of the CGT due on the new sale. If the second venture succeeds and the entrepreneur can make a successful exit the absolute best case scenario is that their overall effective CGT rate across the two investments drops to 22 per cent. We believe this is excessively restrictive and the fact that the second company must be involved in an activity “not previously carried on” by the entrepreneur or an associate dilutes the incentive even further. We propose a more general relief from CGT for entrepreneurial investors regardless of whether they invested in a new business. This would create a clear distinction between enterprise and passive investment. It would involve a lower rate of 15% CGT rate applying

POLICY PAPER: SMEs DRIVING SUCCESS

for people who establish and subsequently sell their own business. This would be limited to relief on the first €5m of chargeable gains. We would also allow the relief to be made available to so-called angel investors, who provide capital for new businesses without taking on executive roles. As it stands the measure is aimed only at the owner/manager, who “is required to devote substantially the whole of his or her time to the service of the company in a managerial or technical capacity”6. Investing at this level is an incredibly brave decision. Angel investors will typically provide more than just upfront capital and will very often mentor and guide the entrepreneur in their venture. This type of support is vital to assisting a company in realising its potential. Angel investors should also be regarded as part of the “team” when entrepreneurs’ relief is calculated.

Provide progressive relief from Employers’ PRSI Fianna Fáil believe resources should be reallocated to support a progressive relief from Employer PRSI. This should be linked to growth in employee headcount. The Government has previously acknowledged the issue of Employers PRSI by deploying the reduced PRSI rate between 2011 and 2013. When an entrepreneur makes their first hire, they are taking a huge risk. This is a vital moment in a company’s development with the entrepreneur being forced to take on board significant personal, financial and regulatory burdens. The state should seek to reduce the upfront financial burden of taking on first employees. We need a scheme that focuses on early stage companies and rewards growth by offering exemptions from and reductions in Employers PRSI relative to the number of staff employed or the company’s wage bill. For example, the first additional employee taken on should be exempt from Employers PRSI for a period of 2 years and the next 5 employees subject to a reduction of 50% on the first €50,000 of salary.

Support family business succession CGT retirement relief has seen significant restrictions imposed on the value that can transfer tax free from one generation to the next if the individual is aged 66 or older. The age limits do not reflect the reality that business owners will often need to retain ownership of their businesses until over 65 in order to ensure that the next generation has acquired the necessary experience and maturity to take on the business. In addition, over the last number of years, many business owners have been forced to retain their businesses in order to keep them viable through the recession. In many instances there was no functioning market for the sale of businesses in the period 2008 – 2014 (and arguably there continues to be no functioning market in many geographical areas or business sectors). We therefore propose that the 66 age limit in the above cases is raised to 72 to reflect the balance between encouraging business owners to pass on their business and the reality of the business environment over the last number of years. In relation to the monetary limit placed on relief available on transfers we would argue that these are causing many business owners to retain ownership of assets until death as no CGT charge applies on assets so passing. We therefore recommend an increase in the limits set out below as follows: Assets transferred to children Transferor aged 55 - 72

no limit

Aged 73 + Assets transferred to others

€6 million

Transferor aged 55 - 72

€1,500,000

Transferor aged 73+

€1,000,000

6 Revenue, (2015), “Revenue Operational Manual”

POLICY PAPER: SMEs DRIVING SUCCESS

Encourage additional research and development expenditure We have an excellent research and development base in Ireland from which to make further progress. Two thirds of Ireland’s R&D is in the private sector, creating new product and service innovations. We welcome the recent changes to the R&D tax credit regime which broadens the range of companies to which the credit is available. However, the regime is still perceived as too cumbersome for entrepreneurs. The documentation requirement for R&D claims below €50,000 should be simplified to support entrepreneurs. Where a company has produced audited accounts, it should have an R&D credit of up to €50,000 automatically refunded (subject to future audit). Many companies which are filing claims are currently going through an onerous process before getting the refund they are entitled to. To help attract additional mobile R&D investment into Ireland, a pre-approval mechanism should be put in place to enable firms to agree in advance the percentage of an R&D grant-aided project that qualifies for the tax credit. We propose a specialist dedicated unit be established within Revenue to deal with specific R&D tax matters, as well as handling technical appeals in a more streamlined manner. In addition we should broaden the relief to enable loss-making companies pass on the benefit of R&D credits to their key research staff.

VAT reform and supports for business cash flow VAT should be addressed through the economy as a whole for SMEs. Any progressive tax system, which is nurturing small businesses, needs to recognize that VAT can act as barrier to industry growth. We believe that reducing the VAT rate for the hospitality sector permanently to 9% will enhance employment creation, once accompanied by regular reviews. Furthermore, reducing the general VAT rate for the supply of goods and services to 9% over the medium term should be examined. The latter would be predicated on ensuring sufficient revenue generation to make up any exchequer shortfall. Cash flow shortages will hurt a business faster than anything else. Permitting a business to account for VAT on cash taken in, as opposed to invoice issues that may have not been collected yet is a real advantage. Furthermore, some small businesses do not process PAYE receipts every month and opt for less frequent payments. Making more businesses eligible for such a deferred system would help manage cash flow challenges, which would have the advantage of having no cost to the exchequer. At European level, new EU VAT rules for digital services need to be introduced quickly to reduce administrative burdens for small businesses. Since, the beginning of 2015, companies providing cross-border digital services must charge VAT at the level which applies in that customer’s Member State. However, for Irish SMEs, they may have to deal with over 80 different VAT rates that are in place across the EU. This can be overtly time-consuming and burdensome for many SMEs. Ireland must push at EU level to fast track these new VAT proposals to reduce red tape in this area for SMEs.

POLICY PAPER: SMEs DRIVING SUCCESS

DIRECT SME FUNDING SOURCES 2 PROVIDING Fianna Fáil will: › Support the establishment of a fully licenced state enterprise bank. › Incentivise crowdfunding of SMEs by waiving PRSI and USC on the interest on such investments up to €20k at the standard 20% income tax rate. › Allow credit unions be used as a source of direct funding for SME’s. › Enhance the employment and investment scheme. › Tackle legacy debt issues in SMEs. SMEs are the lifeblood of the economy and that without easy access to credit, we risk cutting out the oxygen that sustains and grows our indigenous sector. In this section, we outline various SME friendly funding sources that will provide seamless accessibility. Fianna Fáil supports a more creative approach to SME funding, to guarantee significant investment is available instantaneously for small businesses. We outline our innovative proposals for direct access to SME credit below.

Setup a fully licenced state enterprise bank Since 2013, Fianna Fáil has set out proposals for the establishment of a fully licenced state enterprise bank similar to the former Industrial Credit Corporation (ICC) as a key priority in government. The action plans for jobs claimed the ambition ‘to make access to finance a central feature of the Government’s recovery and growth plans for the economy in general and for the SME sector in particular.’ However, overall lending to SMEs continues to decline. Comparing Q1 2015 to Q2 2014, the loan stock of SME credit reduced by 10.4%7. The recently established Strategic Banking Corporation of Ireland (SBCI) will not have a banking licence. Instead it will provide credit to existing pillar banks of AIB and Bank of Ireland (and potential new entrants) who then lend to SMEs. Fianna Fáil believes that 7 Central Bank of Ireland, “SME Market Report -2015 H1”, 9 July 2015

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the SBCI should be permitted to lend directly to SMEs. The banks have hoarded capital over the last five years and it is likely that they will continue to take a very risk adverse approach to lending. This has to change as many firms with viable business propositions will be denied the capital they need to invest and grow their business. Cheap funding from the SBCI may help the banks’ profitability without improving credit flow in the economy. The new entity falls well short of a full service, state backed bank along the lines of the ICC which operated successfully in the economy for many years. This was a commitment in the 2011 Programme for Government but has not been delivered. A fully fledged enterprise bank should be a permanent solution. Fianna Fáil believes that the lending gap which exists in Irish banking would be bridged via a state enterprise bank that would lend to any company, regardless of sector or size, provided it can demonstrate its creditworthiness.

Incentivise crowdfunding to SMEs Crowdfunding of SME loans is a rapidly growing sector across the EU and US. Already a number of platforms are operating in Ireland. Given the weakening of bank’s traditional role as a business lender and given the low deposit rates available for savers there is a natural synergy in an approach that links small-scale investors to SMEs in need of finance. It also leverages the wisdom of crowds, which are often very accurate predictors of outcomes when people’s own money is on the line. As with all investments there is risk, but experiences with crowdfunding to date have been largely positive and as investors can research and even visit a business looking for funding they can get a feel for it and feel engaged with their investment choice. Nevertheless diversification is desirable. Fianna Fáil wants to make Ireland an exemplar of business innovation and growth. Currently the interest on crowdfunding loans is subject to income tax, USC and PRSI as unearned income. This compares to DIRT (and potentially PRSI) on the (low) interest earned if an investor left their money in the bank. To incentivise crowdfunding, we propose waiving the PRSI and USC on the interest on any such investment up to €20k. The interest earned would also be subject to tax at the standard rate of 20% rather than the investor’s marginal rate. Investors would be required to invest in a minimum of three loans to qualify for the tax incentive, in order to ensure they have achieved diversification. On the other side of the investment, for a SME to qualify it must meet the Revenue definition of ‘a small company’ (<50 staff; <€10m turnover). By offering such incentives we aim to expand this sector in Ireland and encourage more crowdfunding platforms to set up here.

Credit Unions – an alternative to bank finance Credit unions are embedded in every community in Ireland and are built on the proven cooperative model with almost 3 million members and nearly 400 offices nationally. They primarily offer savings and loan services to their members. The importance of credit unions in every part of the country is highlighted by the fact that the sector employs 4,000 people and has almost 10,000 volunteers in every community nationally. Credit unions’ main business sector centres on personal lending, while the guaranteeing of commercial loans would require different skills compared to personal lending. It is our belief that the sector is overburdened with regulatory restrictions and limitations which are disproportionate to the level of risk which is stifling its growth potential. Credit unions currently have €4bn out in loans to members which is about 30% of their available funds. The sector has about €6bn available to lend with the potential for a massive shot in the arm for the local economy. However, 52% of credit unions are currently subject to restrictions on their lending activity imposed by the Registrar of Credit Unions.

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Year ended accounts and Prudential returns 2000-2014 Fianna Fáil support the review of current legislation pertaining to the overly strict limits being placed on credit unions’ lending activity. This will allow the sector to thrive and provide real competition to the banks. Such an enhanced lending facility would act a direct source of funding to a greater number of potential business start-ups and SMEs looking to expand. The added value of investing in the community to fund local enterprises and grow employment is a win win for all.

Enhance the employment and investment incentive scheme The announcement that the employment and investment incentive scheme is being extended to 2020 is on the face of it welcome. However, it had never actually been indicated that the scheme would expire at a particular date. By putting in place an end date the government may inadvertently create doubt about the attractiveness of the scheme. The current scheme could be made more attractive by allowing full tax relief when the investment is made in a start-up company, which would facilitate raising capital for SMEs. The SSIA scheme showed how successful such an approach has been. Enhancing the scheme would be beneficial and could result in it becoming a significant source of funding for SMEs. This would allow savers to allocate some of their money into an account that would be lent to or invested in SMEs under the management of their bank and enable full tax relief (up to 40% in certain circumstances) for it.

Tackle legacy debt issues in SMEs SME credit cannot be solved in isolation from SME debt. One of the reasons many companies cannot get new funds is that they are burdened down with legacy debt often taken through property investment. In most cases, SMEs are generating an operating profit but may be making an overall loss due to the cost of servicing its historic debts. Acquiring data has proven difficult on the extent of the restructuring that has taken place of SME debt and the targets that the banks are working towards. If a firm goes bust and workers lose jobs, it can have equally devastating consequences for a household. Latest statistics from the Central Bank show that the outstanding debt to Irish SMEs is still excessive. Worryingly, more than 20 per cent of SME business loans are still in default, while nearly 40 per cent of SME debt held by financial institutions is distressed8. A detailed update on the measures taken to date in relation to SME debt is urgently needed. Specifically we believe as much information as can be released subject to commercial considerations would be provided on the following: › The nature of the targets imposed for both AIB and Bank of Ireland. › The range of sustainable solutions that can be utilised in reaching the targets set. › The amount of debt restructured to date and how this is broken down between property and non-property related debt. › The level to which the bank are claiming compliance with targets and the procedures to verify this. › Data on the level of the extent to which customers are fulfilling revised arrangements. › Plans to extend the process to the non-pillar banks which come under the supervision of the Central Bank 8 Central Bank of Ireland, “SME Market Report -2015 H1”, 9 July 2015

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PROMOTING ENTREPRENEURSHIP

Fianna Fáil will: › Build a coordinated entrepreneurship programme into the school curriculum. › Develop a skill focused apprenticeship framework. › Introduce a business advice voucher scheme (worth €2,500 each). › Provide a structured mentoring system for entrepreneurs. › Locate a separate national office for young people in Enterprise Ireland to raise the start-up rate of youth enterprises. › Roll out the Farmleigh fellowship programme to other countries. › Support one single government department responsible for job creation with a single management structure facilitating the integration of EI, LEOs and IDA. › Introduce mentoring exchanges between multinationals and local SMEs. It is an imperative that we incentivise entrepreneurship and implement policies that deliver tangible job creation and importantly balanced regional growth to every community in the state. Measures are urgently needed to promote and grow the Irish entrepreneurs of tomorrow, who will create jobs and sustain the economies of local communities.

Encourage entrepreneurship from a young age A 2015 report by the EU’s working conditions agency indicated that Ireland has one of the lowest levels of young entrepreneurs in the EU, with only 4% of 15-29 year olds describing themselves as self-employed9. The Irish education system needs to promote entrepreneurship and self-employment. Educational programmes need to give students entrepreneurship skills and the confidence to pursue their own business ventures in the future. The primary aim is to bridge the deficit in entrepreneurial knowledge, skills and attitudes. Such experience engenders young people with skills and competences such as opportunity identification, business planning and running pilot businesses, including soft skills like teamwork, initiative, and creativity. Such competences and skills will significantly spur risk taking and business start-ups. There will also be the added bonus of promoting self-employment as a career pathway and promote youth entrepreneurship as something students can aim towards in their professional development. 9 EUROFOUND, (2015), ‘Youth entrepreneurship – Values, attitudes and policies’, April 2015

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Promoting entrepreneurship at primary and secondary school levels Fianna Fáil believe that work placements are a critical part of transition year but this could be also supported with more funding to encourage student start-ups within the school system. Both businesses and schools should work in unison to enhance opportunities for work experience placements and permit businesses to interact with local schools. For example, students studying business should also be encouraged to set up real life businesses similar to the young enterprise scheme. In primary education, at senior class level, young people should be introduced to entrepreneurship in order to boost a person’s interest in owning their own business. Bringing in local business people to impart their knowledge and imprint an entrepreneurial interest from an early age should be encouraged. At secondary level, the school curriculum should expand in promoting entrepreneurship in providing technical skills, using mini-companies relating to active learning and real-life scenarios. Students should be taught about business planning, how to register an enterprise, opening a bank account, taxation matters and how to source start-up funding through real life simulations. Such programs do exist in some counties but only on a voluntary basis. An expansion of the Sean Lemass Awards for Excellence in Enterprise’ should be explored to further incentive youth entrepreneurship additionally.

Development of a skill focused apprenticeship framework Apprenticeships offer a structured educational and training pathway to a qualification in various employment professions. Improved co-operation between businesses and education providers will ensure that students are taught the skills to meet industry employment demand. Addressing skill shortages is fundamental to economic growth. Skills are a competitiveness issues for SMEs and matching skills and qualifications with market demand is key to creating jobs. Nowhere is this clearer than in the area of STEM (Science, Technology, Engineering and Math) skills, where there is a short term take up in these subjects by students. The European Commission forecasts a staggering shortage of ICT professionals in Europe of 1 million by 2020. Alarmingly, the digital skills shortage is more pronounced in Ireland with 42% of the workforce having few or no digital skills with half of companies (highest in the EU) finding it difficult to recruit IT workers10. It is vital that there is a joint plan set out by industry, education providers and government to ensure a sufficient stream of qualified graduates in STEM skill subjects. This is necessary to create the future entrepreneurs in advanced manufacturing and ‘big data’ start-ups. Considering, the meagre number of people undertaking apprenticeships in Ireland of 7,39811 Fianna Fáil has consistently set out proposals to expand the apprenticeship system12. 10 European Commission, 2015, “Country Report Ireland 2015”, SWD(2015) 27 final, February 26 2015 11 There were 7,398 apprentices actively engaged with the apprenticeship system in Q2 2015. (Parliamentary question June 2015). 12 Fianna Fáil, (2015), “Pre-budget proposals 2015”, October 2015

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Summary of apprenticeships proposals: › Apprenticeships should be offered in a wider range of skills/crafts and based on regular reviews of industry needs. For example an apprenticeship scheme in the bar and catering trade could be of great assistance to both prospective employees and the hospitality sector, preventing the casualisation of trades. › Apprenticeship quality should not lag behind academic qualifications in how they are observed by both employers and prospective apprentices. › Apprentices should be able to learn a broader range of skills during the off-the-job element of their course. This should cover skills in numeracy, technology and language which are highly valued by employers. › Firms should be incentivised to take part in the apprenticeship scheme. Germany has a long tradition of major industrial firms offering apprenticeships and seeing it as an integral part of their industrial policy e.g. grants. › An online apprentice vacancy matching service should be developed as part of INTREO’s services, similar to that available in the UK. › Government agencies like OPW should have apprenticeship schemes in place e.g. property management, property restorations, stone masonry, fisheries, agriculture etc. We welcomed the recent announcement by the Apprenticeship Council to expand apprentice categories. This is in line with what Fianna Fáil outlined in our 2015 pre-Budget submission.

Provide a structured mentoring system for entrepreneurs Fianna Fáil believes that there are two parts to approaching mentoring comprising a domestic and international network of mentors. We propose a structured system of mentors to support people starting up a business. Currently, LEOs, Enterprise Ireland (EI) and Bord Bia encourage entrepreneurs to share ideas, and to provide cross agency support for new enterprises commencing business. This could be enlarged to cater for networks of business angels interested in investing in the prospective business ideas of young people. LEOs must also promote and advertise their services in enterprise support and capacity building; so a greater number of entrepreneurs are mentored from the earliest stage.

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We also believe that a separate national office for young people should be located in EI with the objective of raising the start-up rate of youth owned enterprises to at least the EU average. We shouldn’t be afraid to celebrate success. EI should establish a nationwide competition which recognises young people who are achieving success in their business.

Provide business advice vouchers to help more start-ups survive Fianna Fáil would introduce a business advice voucher scheme, open to 5,000 entrepreneurs in the start-up stage, who require finance to support their enterprise in scaling up. Vouchers worth €2,500 each would assist entrepreneurs in managing and growing their business. Good financial acumen is vital to the success of any enterprise. Otherwise, a business will fail at the very first stage. Such voucher provision would assist an entrepreneur in availing of a local business advisor, discussing the business’s financial elements, establishing if targets in the business plan are being met, while reviewing business performance regularly. This business advice voucher scheme will enable new entrepreneurs to begin developing the essential financial management acumen required to drive the business forward and scale up.

Multinational mentoring exchanges with local SMEs Where a multinational is given state grant funding to establish in Ireland, such support should be based on agreement to provide locally based SMEs with shared training and mentoring advice. A structured programme would see the multinational voluntarily engage with small businesses in a complementary sector over a period in a mentoring capacity relating to business management skills, training etc. The multinational could consider such mentoring co-operation with local SMEs as part of their corporate social responsibility (CSR).

Rolling out the Farmleigh fellowship programme to other countries Fianna Fáil established the Farmleigh fellowship programme as a direct response to the global Irish economic forum (GIEF). This new facility seeks to build a world class, prestigious and innovative business educational programme, which will promote greater trade, investment and talent development between Ireland and Asia13. The Farleigh fellowship strategy support structure should facilitate both mentoring on a one-to-one basis and boost links between countries to support greater participation by other Irish companies. A much stronger working relationship is needed with our European partners to extend our reach to Asian markets, in particular Taiwan and Vietnam. The Department of Jobs, Enterprise and Innovation needs to formulate a new Asian trade strategy encompassing SME’s as part of its blueprint.

Local mentoring fund for businesses start ups We also recommend that a share of commercial rates should be allocated to support the local mentoring of new enterprises. This initiative would enable local authorities to develop self-funding business models. Such funds could be used to supplement LEOs and not replace any EI funding.

13 http://farmleighfellowship.com/about-us/background-to-the-farmleigh-fellowship/

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TECHNOLOGY TO ENHANCE ENTERPRISES

Fianna Fáil will: › Enable businesses compete in online market. › Develop web-based platforms to support mentoring networks. › Online mentoring network to be broadened to include our diaspora. › Close the net on the shadow economy. › Facilitate flexibility in accessing higher education via online distance learning. Fianna Fáil recognises the necessity for small businesses to have the latest technology at their disposal to do business efficiently in Ireland. In this section, we outline proposals for broadband provision, development of an online mentoring website, the shadow economy, along with access to online education and training to facilitate entrepreneurism growth.

Enable businesses to compete in online market High speed internet broadband internet is a must for business to compete in e-commerce. This technology connects small businesses to a global market so they need to be able to utilise the latest digital technologies like cloud computing and big data to enable their enterprises to grow and prosper. High speed internet broadband is needed for the development of an online e-retailing sector in Ireland. Alternative ways of selling are needed for many businesses that were previously trading on the high street in many towns. These streets have been decimated over the past ten years so there is a necessity for alternative ways of selling to be encouraged.

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Bridge the digital divide in mobile phone coverage for business Mobile phone coverage across many parts of Ireland is clearly not fit for purpose. Frustration levels among customers and business users are widespread due to phone calls dropping and 3G/4G signals remain non-existent in some areas. Fianna Fáil support a national mobile phone coverage audit. Such an audit will form the basis of our infrastructural plans for improving coverage levels and strength.

Online mentoring platform for diaspora to mentor indigenous SMEs Fianna Fáil believes that our global diaspora of entrepreneurs should be engaged to offer mentoring support to indigenous SMEs through web based platforms and cloud technology. This could allow a number of mentoring models appropriate to the type of business start-up to provide an advanced mentoring programme for companies looking to scale up and grow internationally. The quantity and expertise of mentor needs to be advanced with a focus on augmenting mentors with an entrepreneurial background. A dynamic state web based mentor network is required to facilitate a flexible support network for businesses by allowing a principal mentor to tap into available expertise via the network. Mentoring best practices and online case studies should also be published to share between mentors.

Enhance access to online education and training Online distance education provides greater flexibility for accessing higher education to people from an array of socio economic backgrounds and lifestyles. Such flexibility can cater for ‘second chance’ education to people with work and family commitments, who cannot participate in full-time courses, as well as employees who require upskilling to progress their professional development. Online education is vitally important to enhance existing skills and acquire new competences e.g. returning to the workforce after a career break.

Smart and innovative enterprises The smart economy revolves around enterprises generating new innovative ideas and gaining market share. The main elements of a smart economy include utilising knowledge and innovation tools, increasing productivity, embracing digital telecommunication technologies; competing globally, developing green jobs and creating socially responsible enterprises14. Nurturing innovation and creativity in education can also help to close the skill gaps needed to sustain smart economies.

Closing the net on the shadow economy Technology has revolutionised the way we communicate, work and live on a daily basis with instantaneous connectivity becoming standard practice. While consumers behave in this way, traditional cash transactions continue. Fraudulent cash transactions that are concealed from the authorities fuel the so called shadow or hidden economy. The latter is defined by the Revenue as an occurrence which “encompasses businesses and individuals that seek to avoid compliance with legal obligations relating to matters such as taxes and duties”15 . It is accepted that this shadow economy is deeply unfair on compliant businesses. Shadow economy activity focuses on sectors that deal in cash such as the property rental sector. In 2012 and 2013, targeted Revenue audits generated a tax yield overall of €52 million16 equivalent to 20% of total yield exemplifying how widespread the phenomena is. In order to curb such shadow transactions, electronic payments clearly produce tangible results. Therefore, no additional charges should be put on people to carry out electronic transactions and impede use subsequently. 14 Bruneckiene and Sinkiene (2014), “Critical analysis of approaches to smart economy”, http://www.bm.vgtu.lt/index.php/bm/bm_2014/paper/viewFile/259/564 15 Revenue Commissioners, 2013, Annual Report 16 Comptroller and Auditor General, 2014, Report

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SIMPLIFYING THE REGULATORY FRAMEWORK

Fianna Fáil will: › Enact provisions to enable SMEs to access a greater share of public procurement tenders. › Review the effectiveness of existing regulations on SMEs. › Consider an independent regulatory scrutiny board. › Examine ‘one in, two out’ rule for small business regulations. › Explore an assessment and moratorium approach toward SMEs for new regulations. › Improve the regulation of professional services. › Streamline best practice and guidance for SMEs.

Better regulation and reducing red tape for SMEs It is an often repeated mantra that red-tape and bureaucracy should be cut back to enable job creators and SME start-ups to flourish. However, such statements are not always backed up with concrete examples. In this section, Fianna Fáil outlines specific proposals to simplify the regulatory framework for SMEs, in order to reduce administration and compliance costs, without reducing regulatory standards. Regulations pertaining to the business sector necessitate firms having to adapt to new rules, which cost time and money. Compliance costs are viewed by businesses as a financial burden. New regulation can adversely affect SME productivity, while taking resources away from more productive business activities. Changing the existing public procurement process is a clear example of how the regulatory framework is constraining SMEs from winning public tenders. Forfás17 outlines that the regulatory burden disproportionately affects small businesses. As innovate and creative small start-ups are increasingly seen as the engines of the domestic economy, the regulatory impact on SMEs must be analysed. For example, businesses that comply with the regulatory framework should have a quality assurance and “national/ international branding” associated with this to add value to a business e.g. a quality products/services brand. Burdensome regulations for SMEs may lead to high entry costs for business of their size and scale, which affects competitivity, innovation capacity and productivity. A comprehensive approach to reducing the administrative burden and compliance costs for SMEs is outlined in this section.

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Enabling SMEs to access a greater share of public procurement tenders The government is by far Ireland’s largest consumer. Yet too often this consumer power is not put to strategic use, to fulfil value for taxpayer objectives that go broader than a simple consideration of price. This is in contrast to other governments such as the US, Germany and France who use procurement more strategically to support SMEs and industry and increase innovation and growth. The government is not taking advantage of provisions under existing EU procurement law. The latter allows government to set targets to incentivise the best‐possible use of department tools to increase the proportion of contracts going to SMEs and include the impact on local jobs as an element of procurement criteria.

Summary of Procurement Proposals: › Key performance indicators for SME uptake should be fixed for all public procurers. › Office of government procurement should outline clear criteria on the collaborative process. › Procurers should be obliged to set targets in relation to their collaborative efforts as the first step in each procurement. › All interested SMEs should be able to access appropriate training on the issues pertaining to consortium building. › Office of government procurement should provide an updated guidance booklet on procurements. › Specific training must be provided to public procurers in order to boost the skills needed in procuring. › Incorporate social elements in public procurement procedures, to enable SMEs to tender successfully. › Procurement should be facilitated on a regional basis. › Contracting authorities must add provisions in public contracts so payments are made rapidly to suppliers, ensuring small businesses are paid faster for work performed.

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The tendering of public sector contracts is big business. It is estimated that the government spends in the region of €8.5 billion on the procurement of supplies18. This represents the single biggest market opportunity for Irish SMEs. Opportunities for Irish companies across a range of sectors must be enhanced to compete in this lucrative marketplace. Procurement can introduce demand into the economy for goods and services at both local and national level. We believe that a regionalisation approach to procurement is crucial to benefit the local economy. By facilitating greater access to such public contracts, this will support the growth of small indigenous suppliers, while promoting entrepreneurship and business risk taking across society.

Build an SME objective into procurement procedures Any government contract given to large suppliers should be conditioned by the requirement to deliver these contracts with a substantial SME component. Monitoring by government would ensure that these obligations are being met. Building an SME objective into these government contracts would be beneficial in connecting both procurement and contact management skills of these big businesses thereby benefiting the public sector. Such skills would take the government too long to grow at scale if the objective of allocating monies to SMEs involved and awarding companies directly. While this could result in higher prices than can be attained via off-shore outsourcing, it guarantees that government money is being directed into the heart of the domestic economy and the SME sector. Another policy proposal centres on making it a requirement for any contracting authority to add provisions in all public contracts, ensuring payments are made rapidly to suppliers, guaranteeing small businesses are paid faster for their work.

Incorporate social elements in procurement processes Fianna Fáil recently put forward legislation (Public Services and Procurement (Social Value) Bill 2015), requiring public bodies to observe the economic, social and environmental well-being associated with public service contracts being put out to tender. This will level the playing field for Irish SMEs when competing with their European counterparts and has the potential to increase the number of jobs and profitability in the Irish SME sector. Consideration should be given to incorporating social elements in procurement processes. For example, a community benefit clause could be considered in the development of guidance for contracting public authorities across the country. This is a standard feature in many other countries, while EU procurement law makes provision for public authorities to introduce social community clauses in their procurement procedures. The social clause provisions most commonly adopted by countries include reservations for social enterprises and SMEs, along with social inclusion and equal opportunity clauses.

Reviewing the effectiveness of existing regulations on SMEs Fit for purpose regulation is centred on the premise that legislation should encourage rather than inhibit business start-ups. A review of the effectiveness of existing business regulation on SMEs is required in unison with a public consultation whereby all small businesses and civil society stakeholders would identify the top ten most burdensome pieces of legislation for SMEs. Once complete, a government white paper should be published showing the actions to be taken to reduce the regulatory burden for SMEs in these 10 areas. This will provide a clear roadmap to reduce the administrative burden and compliance costs associated for small businesses. 17 http://www.forfas.ie/media/productivity_chapter13.pdf 18 Office of Government Procurement, (2013), “Public Service Spend and Tendering Analysis for 2013”

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An independent regulatory scrutiny board In 2011, the Fine Gael-Labour government disbanded the better regulation unit previously established under Fianna Fáil at the Department of the Taoiseach. Since this, the primary responsibility for oversight functions, including regulatory impact analyses (RIAs), has been taken up by a few government departments. We believe that the concept of an independent regulatory scrutiny board (RSB) should be explored to scrutinise and adjudicate on RIAs carried out across all government departments and offices for legislative proposals. The RSB would carry out its function in an evidence based approach and ensure quality standards are being met. The body would be composed of government officials and external representation. Such a central scrutiny facility would publish all its findings on an online government portal.

Examine ‘one in, two out’ rule for small business regulations In the UK, a regulatory screening mechanism has been introduced to reduce the time and cost faced by businesses (especially SMEs), in complying with the number of new regulations. Government operates a ‘one-in, two-out’ rule for regulations. If a new regulation is being introduced and where a cost will fall on to business to comply with a new regulation, government departments have to eliminate or adjust existing regulation(s) to the value of £2 of savings for every £1 of cost imposed. This system creates a screening facility to prevent new regulations that increase costs for business and voluntary organisations. The success of ‘one-in, two-out’ has been clear. Since 2011, the UK has reduced the annual net cost to business of domestic regulation by £2.189 billion (under both ‘one-in and one-out’ and ‘one-in, two-out’), while the final cross-government position under the ‘one-in, two-out’ rule has saved £661.5 million. It is quite clear that such a system should be examined for operation in Ireland for SMEs.

Consider a moratorium and assessment for new regulations In comparison with large companies, small businesses generally have much less resources to enable them comply fully with all government regulations. As a result, compliance is more expensive. Any disproportionate burdens should be minimised on micro-businesses. In the UK, a small and micro-business assessment (SAMBA) is in operation to achieve this. This cross departmental assessment examines all new government regulations, and where evidence indicates, to provide a legislative exemption for small businesses (up to 49 full time employees), where a large part of the intended benefits of the measure can be achieved without including them. In Britain, a micro-business (up to 10 employees) moratorium also exists. In 2011, a 3-year freeze was introduced on all new regulations for business start-ups and microbusinesses. In 2014, this freeze was extended to businesses with up to 50 staff. While there are some exemptions in the coverage of this measure, both the moratorium and micro-business assessment to exempt SMEs from new regulations should be explored for an Irish setting.

Improving the regulation of professional services Based on 2011 services producer price index data, the cost of the majority of service sectors in comparison with 2006 levels have decreased. However, this was not the case in the accounting, legal, PR and business management sectors. Prices actually increased 1.5% on 2006 levels19, while legal service costs remaining roughly 12% above this reference year. The World Bank cites Ireland as one of the most expensive countries relating to the cost of applying a business contract and in its Doing Business report, indicates that the period of time to resolve commercial disputes in Irish courts is significantly higher than the OECD average20. 19 NCC, (2013), NCC Submission to the Action Plan for Jobs 2014, December 2013 20 World Bank, (2012), Doing Business 2013, October 2012 21 Legal Cost Working Group, (2015), Report of the Legal Cost Working Group

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Such costs can impede small business to navigate any legal hurdles that need to be overcome. The recommendations of the Legal Cost Working Group pertaining to the operation of the legal system need to be closely examined21. These reforms were planned in order to ensure a more efficient operation of the courts, resulting in cost reductions mutually beneficial to all parties.

Best practice and guidance imperative for SMEs With the mounting number of regulations that SMEs and enterprise start-ups have to comply with, the burden in time and money is disproportionately bigger than for large business operations who have increased resources, i.e. HR, legal, accounting, regulatory compliance etc. EU legislation coupled with national laws are putting a gigantic regulatory burden on small business. Therefore, there needs to be a greater focus on developing practical guidelines and tools, exchanges of best practice, and provision of information to help SMEs understand and comply with complex legislation. Many European regulations transposed are of a very technical and complex nature e.g., REACH chemicals legislation, making it challenging for SMEs to fully understand and comply with all the necessary requirements. It is essential to identify measures and tools to help SMEâ&#x20AC;&#x2122;s and companies understand and comply with such complex legislation. If we improve implementation we will reduce the regulatory burden on SMEs.

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Glossary › A Micro Enterprise is defined as: An enterprise having less than 10 employees with an Annual turnover and/or an annual Balance Sheet total not exceeding €2m. › A Small Enterprise is defined as: An enterprise that has fewer than 50 employees with an Annual turnover and/or an annual Balance Sheet total not exceeding €10m. › A Medium Sized Enterprise22 is defined as: An enterprise that has between 50 employees and 249 employees with an Annual turnover not exceeding €50m or an annual Balance Sheet total not exceeding €43m. Micro, small and medium enterprises account for 99.7 % of all active business enterprises, employ 68% of the workforce and generate just over half the State’s annual turnover, according to the Central Statistics Office (CSO).

Costings Taxation and expenditure proposals in this document were submitted to the Department of Finance and Department of Public Expenditure and Reform. Based on specific annual costings for proposals received and the latest budgetary data on an earned income tax credit, these are shown below. € Earned income tax credit

61m

Employment and investment scheme relief

10m

National office for young entrepreneurs 5,000 business advice vouchers Total

2m 12.5m €85.5m

22 “Official Journal of the European Commission (L 124/36) 20th May 2003 – Commission Recommendation of 6th May 2003 concerning the definition of micro, small and medium-sized enterprises”

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JOHN McGUINNESS TD SPOKESPERSON ON SMALL BUSINESS REGULATORY FRAMEWORK Dáil Éireann, Leinster House Kidare Street, Dublin 2. Constituency Office: O’Loughlin Road, Kilkenny. ✆ 056 777 0672/3 v 056 777 0674 * john@johnmcguinness.ie 8 www.johnmcguinness.ie H 087 285 5834

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