The Small Firms Association has called on the Government to return capital gains tax to the 20 per cent rate that was levied on profits from asset sales before the financial crisis.
“The tax system has a vital role to play in supporting development at each stage of the life cycle of a small business. The capital gains tax regime is in need of an overhaul to boost investment,” said AJ Noonan, chairman of the SFA, as the lobby group launched its pre-Budget submission.
"Practice over the last 20 years has shown that when the CGT rate drops, the exchequer benefits due to a surge in activity, so this is a clear win-win," said Mr Noonan.
While the CGT rate was cut in half to 20 per cent in 1998, the past two governments increased it gradually between 2008 and 2012 to 33 per cent as they sought to rein in the public finances during the financial crisis.
“This puts Ireland at a competitive disadvantage when it comes to attracting and retaining mobile business,” the SFA said. “By comparison, the UK rate is either 18 per cent or 28 per cent, depending on the size of income and the capital gains.”
In addition to seeking a cut across the board in CGT to 20 per cent, the SFA is seeking a three-year 10 per cent rate for the disposal of sites with planning permission.
“This would encourage the sale of sites that current owners are not in a position to develop and, as such, contribute to increased supply of housing,” the SFA said in its 14-page document.
The representative body has also called for the Government to abolish the 3 per cent Universal Social Charge surcharge that applied to the self-employed, which would cost about €60 million.