Feature Article
Welcome to This Week's Issue | Sponsored by PwC

Dear ,

 

We are delighted to bring you this update on Dublin Chamber’s lobbying agenda and recent developments affecting businesses across the Dublin region.

 

The revised National Development Plan 2021-2030, announced earlier this week, saw the Government recommit to major investments in public transport, housing, and other infrastructure. In the past, planned infrastructure projects have repeatedly fallen victim to unexpected economic shocks, with previous Governments choosing to cut the capital budget in times of fiscal constraint. The effects of this historical short-sightedness are evident in Dublin’s infrastructure deficit, and Dublin Chamber has been lobbying hard over the past year to ensure that Covid-19 is not used as an excuse to repeat the pattern.

 

This time, things appear to be different. Dublin Chamber has welcomed the revised NDP for its continued commitment to Metrolink, BusConnects, DART+ and other critical projects despite serious pressure on the public exchequer. However, we have also stressed the need for clearer timelines for delivery, and we will be monitoring this closely in the coming months. Housing and infrastructure remain key concerns for our members, and we look forward to sharing views and expertise with you through our events this season.

 

With Budget 2022 due to be announced next Tuesday 12th October, businesses will be listening closely to the Government’s plans for the future of the EWSS and other Covid-related supports. Dublin Chamber has argued strongly for a phased approach to discontinuation that avoids a damaging cliff edge for impacted businesses. On Friday 15th October at 12pm, we will be holding a focus group on the business impact of Budget 2022, and we look forward to hearing your feedback. To register your interest in participating, please contact carol@dublinchamber.ie.

 

You can find out more below. As always, please don’t hesitate to get in touch with your feedback or concerns by contacting policy@dublinchamber.ie.

 

Regards,

Aebhric Mc Gibney
Director of Public & International Affairs


Budget 2022: A Fine Balancing Act - PwC
 

As we emerge from the grip of COVID-19, many challenges remain including housing, climate change, supply chain disruption, Brexit, global tax reform as well as our mounting national debt.  But there are limited resources available (circa €1.5 bn of spending/taxation measures) so this will need to be carefully targeted to achieve the best outcome for the indigenous economy. Budget 2022 will be a fine balancing act. 


Budget 2022: A fine balancing act 

 

By Ronan Furlong, Tax Partner, PwC Entrepreneurial & Private Business Practice


As we emerge from the grip of COVID-19, many challenges remain including housing, climate change, supply chain disruption, Brexit, global tax reform as well as our mounting national debt. But there are limited resources available (circa €1.5 bn of spending/taxation measures) so this will need to be carefully targeted to achieve the best outcome for the indigenous economy. Budget 2022 will be a fine balancing act. 
 

Irish private businesses employ 45% of people working in Ireland. Budget 2022 should be targeted to maintain employment and support future growth in this important sector. For private businesses, there are four strategic priority areas we would like to see targeted for support: employment maintenance and business restoration; growth and investment; business succession and building a sustainable Ireland. 

 

Specific measures which we hope are high on the Minister’s list include: extending the Tax Debt Warehousing Scheme and introducing the tapering of Business Rates until the end of 2022 as  now is not the time to call in debt. In addition, our hospitality sector is only now emerging from a crisis period and priority needs to be given to supporting them by extending the 9% VAT rate for the hospitality sector to 31 December 2023. 

 

We also believe that a measure to encourage capital spending in the economy merits careful consideration and we are suggesting a ‘super deduction’ for capital expenditure on plant and machinery and expenditure on buildings/factories that receive a recognised accreditation for overall energy performance. We also would like to see a temporary reduction in the rate of Capital Gains Tax and Capital Acquisitions Tax to stimulate economic activity. 

 

On personal tax there we do not expect significant measures. Reduction in personal tax rates are unlikely but there may be a slight movement on tax bands and credits (but only to make up for inflation). On PRSI, the government will be very mindful of getting people back to work. If there are any movements, we would be hopeful that these are delayed until 2023 when the economy and jobs have recovered.  

 

Ireland is prioritising its transition to carbon neutrality. Businesses need to embrace climate action and the challenges and opportunities this will bring. We need to grow our energy supply in a greener way - including through green hydrogen and wind energy. We believe that tax policy can play a critical role in Ireland’s decarbonisation journey and influencing behaviour. For example, R&D tax credits to promote sustainable and green tech investments, incentivising green actions such as more electric vehicles and retrofitting homes as well as promoting Ireland as a ‘green’ finance hub. Suggestions of raising VRT/BIK on electric vehicles seem out of step with these priorities and premature. 

 

Remote working is fast becoming the new work model and, with less travel, is also one of the great ways to promote a greener society. The Minister could introduce a flat rate tax credit instead of the current situation where bills need to be submitted and would be less complicated or he could increase the PAYE/earned income tax credit. As a large proportion of people are remote working already, further incentives may not actually be needed, but they would help offset increasing energy costs. 

 

Many companies are experiencing staff shortages. More support is needed on upskilling and training to ensure Ireland continues to have the digital skills for the future.  We need to make sure that Ireland continues to attract talent and that our personal tax system is not a barrier. We  have a high personal tax burden by international standards and we would like to see the Minister committing not to increase the personal tax burden and to reduce it over time. 

 

On pensions we have a huge shift in our demographics coming down the track.  Currently, there are around 4 people of working age supporting every person aged 65 and over. This number is expected to fall to just over 2 by 2050. The main focus for the government should be to encourage greater pension participation. It will be key not to reduce pension tax reliefs and not to do anything drastic now as we plan for auto enrolment in 2023. 

 

On corporate tax, there has been huge focus on the global minimum tax rate and the OECD proposals, which will fundamentally change how multinationals are taxed. The best solution at this stage from an Irish perspective would be that the global minimum tax rate lands at 15% for large multinationals.  Crucially, for Irish owned businesses with turnover less than €750m, we would be hopeful that the 12.5% corporate tax rate stays.  

 

So although the minister has limited resources available, we feel that these can be carefully targeted to support the sectors that need most help as the economy emerges from the Covid pandemic.   

 

Talking Housing with Eoin Ó Broin TD
 

Join Dublin Chamber at 12pm on Wednesday 20th October to hear the Sinn Féin Spokesperson for Housing Eoin Ó Broin discuss his vision for the future of housing in Dublin. You can book your place here.

 

This event will be relevant to all businesses with an interest in politics, housing policy, and the long-term future of the housing market in Dublin. Deputy Ó Broin will address Chamber members on Sinn Féin’s policy priorities for the Department of Housing, Local Government & Heritage and the challenges he envisages in the coming years. His presentation will be followed by an opportunity for audience Q&A. 

 

Eoin Ó Broin is a TD for Dublin Mid-West and has been the Sinn Féin spokesperson for Housing, Local Government and Heritage since 2016. He has been a Sinn Féin activist for 22 years in Belfast and Dublin, was elected to Belfast City Council between 2001 and 2004 and was a member of South Dublin County Council between 2013 and 2016 when he was first elected to the Dáil.

 

Ó Broin is the author of a number of books including HOME: why public housing is the answer (Merrion Press 2019) and Defects: living with the legacy of the Celtic Tiger (Merrion Press 2021).


New Water Charges Go Live for Business
 

A new tariff framework for Irish Water’s business customers went live at the beginning of this month (Friday 1 October 2021). To assess the impact of the new charges on your business’s future bills, visit www.water.ie to use the online calculator tool. Further information is also available online including a detailed Q&A and case studies.
 
The changes were originally due to go live on 1 May 2020 but were deferred to 1 May 2021 and again to 1 October 2021, following Dublin Chamber representations that the changes ought to be deferred due to the uncertainty facing businesses under the Government’s public health guidelines due to COVID-19.

 

The aim of the new system is to provide a clear, transparent, and equitable charging regime for businesses regardless of their location. Currently there are over 500 different tariffs, with customers in different local authority areas paying different charges. There has been no change to charges since 2014 and in many cases much longer. The new framework will now standardise charges across the country while recovering the cost of providing water and wastewater services to non-domestic customers.

 

Irish Water has written to all business customers to outline what the changes meant for them, and reports that the vast majority of customers will see either a decrease or an increase of less than €250 per annum, in their annual bills.

 

For customers who will face larger increases in their annual bill, Irish Water will put in place a number of important support measures. Connections that see an increase of €250 or more will be transitioned to the new tariffs over 3 years.  For connections that will face an increase of €750 or more, Irish Water will automatically apply a 10% cap to their annual bill increase in any one year.

 

Customers who may be experiencing billing or payment difficulties can contact Irish Water’s dedicated business team on 0818 778 778 / International +353 1 707 2827. Lines are open Mon-Fri, 9am-5:30pm.


Work Safely Protocol Update
 

With businesses reopening their premises and thousands expected to return to the office on a phased basis over the coming weeks, the Government has updated its Work Safely Protocol. You can access it here.

 

This revised Protocol incorporates the current Public Health advice, on the measures needed to reduce the spread of COVID-19 in the community and in workplaces as issued by the National Public Health Emergency Team (NPHET) and the Department of Health. The main updated public health advice includes information on ventilation of workplaces and vaccinations to reflect new knowledge and a changing Public Health situation.

 

The Protocol is a general guidance document applicable to all sectors. It is not designed to prohibit the introduction of further specific measures in particular sectors or workplaces. Further specific measures can be introduced as long as they enhance the measures set out in the Protocol. It sets out the minimum measures required in every place of work to prevent the spread of COVID-19 and to facilitate the re-opening of workplaces following temporary closures and the ongoing safe operation of those workplaces.

 

The Government has also produced a range of materials for use by employers to promote safe working on the business premises, including guidance videos, posters, and employee checklists.


EWSS Update
 

Following an announcement by Minister Paschal Donohoe recently, the Employment Wage Subsidy Scheme (EWSS) is continuing to operate in its current form during October 2021, so that the main eligibility requirement remains a 30% decrease in turnover or customer orders in the full year 2021 compared to the full year 2019. The enhanced rates of support and the reduced rate of Employers’ PRSI continue to apply for the month of October 2021.

 

The Government has committed to avoiding a cliff-edge to the support schemes, as Dublin Chamber has been continually argued this would cause unnecessary financial shock to impacted businesses.

 

However, the Government has advised that as the recovery gains momentum, it will be necessary to give consideration to the recalibration and ultimately the phasing out the temporary support schemes. As such and as signalled previously, the Minister is considering the appropriate calibration of various elements and features of the EWSS.

 

No decisions have yet been taken as to the appropriate operational parameters for EWSS for the remainder of Quarter 4 2021 (November and December) and its possible extension beyond end-2021. The Minister is considering a range of possible options for the future of EWSS and such arrangements will be outlined on Budget Day, 12 October 2021.


Budget 2022 Briefing with PwC
 

Join us on Tuesday 12th October at 5:15pm for a virtual Budget 2022 briefing with PwC.

 

For Irish owned companies, Budget 2022 is set against a backdrop of significant economic, political and societal uncertainty. 

 

What will the changes mean for you, your business, your customers and for Ireland as we look to 2022 and beyond? In our virtual event, PwC tax experts will present their insights into the measures announced by the Minister for Finance.

 

Moderator Mairead Connolly, Tax Partner, PwC will be joined by Jim Power, Independent Economist and joint broadcaster of The Other Hand podcast, and PwC Tax Partners, Nicola Quinn and Ronan Furlong who will share their views on the measures announced and what they will mean for you, your business and the country as a whole. Book your place here.