Business lobby group Isme has called for the Government to focus its enterprise policy on helping indigenous businesses to grow and reduce its “dangerous overreliance” on multinationals.
In its pre-budget submission, the organisation said budget policy should be used to encourage Irish businesses to grow, provide affordable access to capital and strengthen skills and training.
The group, which represents small and medium-sized companies in Ireland, said 0.1 per of the total number of companies in Ireland – 297 – accounted for 84 per cent of corporation tax receipts last year, warning that this situation posed a “systemic threat” to public finances, the income tax base and the wider domestic economy.
Chief executive Neil McDonnell acknowledged that the previous economic model had delivered strong growth, but warned that it was based on a “dangerously narrow foundation”.
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“Our tax base is built on a very small number of companies, and this is simply not sustainable. For many years, our enterprise policy has overseas multinationals at the expense of local business, particularly in the areas of R&D supports and key employee engagement,” he said. “Budget 2027 must make a decisive turn towards building a resilient, home-grown enterprise sector; one that employs the majority, generates wealth in every region and is not vulnerable to the decisions of a handful of boardrooms abroad. We have the policy. We have the analysis. We now need the political will to act.”
Isme is proposing a number of measures, including changes to capital gains tax (CGT) that would see a standard rate of 25 per cent, a reduced rate for intellectual property of 20 per cent and the taxing of dividends under CGT rates rather than marginal income tax rates. It is also seeking reform of research and development tax credits.
It is also backing ways to activate more risk capital in the economy, highlighting the missed opportunities between available capital and SME investment, and wants to see a greater emphasis on attracting what it describes as “symbiotic” foreign direct investment that could benefit indigenous companies rather than relying on global supply chains.
Isme also wants to see an increase in the Skillnet budget to at least €100 million to help match skills expenditure to the needs of the market, alongside reform of the apprenticeship and vocational education systems to bring them in line with the best-performing small economies in Europe.
