Government urged to use €1bn from corporate taxes for Brexit fund
Budget should prepare economy for ‘shock’, says British Irish Chamber of Commerce
About €1 billion should be diverted into a Brexit fund, to pay for staff training, grants and a “customs voucher scheme” for companies dealing with customs for the first time. File photograph: Stefan Rousseau/PA Wire
The British Irish Chamber of Commerce is calling on the Government to divert €1 billion of windfall corporate taxes into a Brexit response fund to aid businesses affected by Britain’s exit from the European Union.
The chamber, which is based in Dublin, makes the call in its pre-budget submission. It has urged the Government to use the budget in October to prepare the economy to withstand a “Brexit shock”.
The chamber cites figures from the Irish Fiscal Advisory Council, which estimates that between €3 billion and €6 billion of the €10.4 billion of last year’s corporate tax revenue could be considered “excess”, or windfall taxes.
It says the Government should hive more than planned of corporate tax revenues into the State’s “rainy day fund”. About €1 billion should be diverted into a Brexit fund, it argues, to pay for staff training, grants and a “customs voucher scheme” for companies dealing with customs for the first time.
John McGrane, the director-general of the chamber, acknowledged that such a fund to directly help business would likely need permission from the European Union under state aid rules.
It has to be quite targeted. It cannot be one for everybody in the audience
“Ireland’s loyal membership of the EU will hopefully lead to a level of understanding from our European partners,” he said.
Mr McGrane said the assistance to businesses could be a mixture of grants and low-cost loans.
“The essence of this is that it has to be quite targeted. It cannot be one for everybody in the audience,” he said.
Mr McGrane also warned that many smaller businesses are ill-prepared for a Brexit shock.
“Large, highly-regulated industries, such as pharma and financial services, are mandated by their regulators to be ready, and they are. But SMEs and micro businesses are taking their chances. We encourage them not to, although understand why they choose to [wait and see],” he said.
Other budget measures proposed by the chamber include increasing tax credits for research and development; a reduction in capital gains tax; building an “innovation campus” in Dublin to link businesses and academia, delivering upon an idea previously discussed by ministers; and the fostering of research collaborations between universities in the Republic and the North.
It also includes proposed measures to tackle climate change, such as funding bioenergy projects and ringfencing carbon taxes to pay for green measures.
The chamber also calls for measures to combat the housing crisis, such as diverting some of the State cash spent on rent subsidies towards the development or purchase of more social housing.
“The Government should consider ways to divert some of the spending on the Housing Assistance Payment (HAP) towards developing social and affordable housing or acquiring housing to build up the portfolio of State-owned property,” the chamber said.
The chamber argued that HAP payments have “unintended consequences, not least unintentionally fuelling rental inflation”.
“The cost of providing HAP is increasing year-on-year and the State never owns the end product,” it said in its submission.
It also called for the reduction or removal of VAT on build-to-rent properties.