BUDGET 2021 - Cork Chamber
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CORK CHAMBER | BUDGET 2021 SUBMISSION
BUDGE T
2021
SUBMISSION
CORK CHAMBER | BUDGET 2021 SUBMISSION Contents Introduction to Budget 2021 03 2021 Priorities for Economic Continuity 04 Gender Equality: SDG 5 05 Decent Work and Economic Growth: SDG 8 06 Business Support Packages for COVID-19 and Brexit 06 Employer PRSI 07 Gift Vouchers for Local Business 07 Industry, Innovation and Infrastructure: SDG 9 08 Corporate Tax 08 Capital Gains Tax 08 Gift Vouchers for Local Business 09 Employment Investment Incentive Scheme (EIIS) 09 Infrastructural investment 10 Aviation & Tourism 11 Sustainable Cities and Communities: SDG 11 12 Climate Action: SDG 13 14 Cork Chamber’s Budget Committee 15 2
CORK CHAMBER | BUDGET 2021 SUBMISSION
Introduction to
Budget 2021
Cork Chamber represents 1,200 members employing over 100,000 people.
The Chamber vision is for Cork to be the best place for business, empowered
by a thriving, diverse and influential membership.
Cork Chamber welcomes the opportunity to make a submission to Budget 2021. This submission is
focused on positioning Cork as an area of exemplary economic resilience, by mobilising our metropolitan
area to differentiate itself internationally through the lens of the UN Sustainable Development Goals.
Our submission is influenced by the current pandemic and forthcoming EU-UK withdrawal. It is also
wholly guided by the Cork Chamber commitment to the United Nations Sustainable Development
Goals. The goals are the blueprint to achieve a better and more sustainable future for all. They address
the global challenges we face, including poverty, inequality, climate change, environmental degradation,
peace and justice. Our submission is aligned to the five goals supported by Cork Chamber and our
colleagues in Chambers Ireland.
Our Sustainable Cork Programme ‘Building Economic Resilience’ report offers a vision for recovery
set by almost 1,000 people who engaged in our survey and 10 sectoral Think Tank focus groups and is
linked below as a significant appendix.
https://www.corkchamber.ie/wp-content/uploads/2020/07/Sustainable-Cork-Programme-Building-
Economic-Resilience.pdf
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Signatures.pdf 1 25/07/2019 09:25
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Conor Healy, Cork Chamber CEO Seamus Downey, Budget Committee Chair
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CORK CHAMBER | BUDGET 2021 SUBMISSION 2021 Priorities for Economic Continuity • Increased counter cyclical infrastructural spend • R efinement and extension of EWSS • S upport for aviation route marketing and capital programmes for connectivity and tourism jobs 2021 tax free voucher increase to €1,000, subject to • A local spending criteria to stimulate local spend in retail and hospitality. • Increased support for the Renewable Electricity Support Scheme and anaerobic digestion • A dditional funding for accessible, affordable and high-quality childcare services. • A reduction in capital gains tax to 25% to drive economic activity • A temporary reduction in employer PRSI to 5.5% to stimulate job creation and retention • S implification and reform of the EISS so it can be used by business owners injecting capital into affected businesses. 4
CORK CHAMBER | BUDGET 2021 SUBMISSION
Gender Equality:
SDG 5
Gender inequality and unequal workforce participation are clear barriers
to a fair society and inhibit economic growth. With the added turbulence
of working from home, there are added added pressures. For example,
without strong support for early childhood settings, the whole of the
economy is operationally challenged.
• A
dditional funding for accessible, affordable and high-quality childcare services
• C
ontinued investment in the Early Childhood Care and Education scheme (ECCE)
• Incrementally increase total investment in childcare to 1% of GDP, as recommended by UNICEF
• R
eview and address costs and barriers to entry to grow the childcare sector, such as insurance,
local rates, and childcare affordability
• T
he CSO reported that almost half (45%) of fathers entitled to paternity benefit did not take it
in 2018. Budget 2021 must set aside funding to enable a review of Paternity Benefit to better
understand any obstacles for take-up to support parenting equality
• Increase investment in childcare services, early education infrastructure and schools that are
reopening to facilitate before and after school childcare in all parts of the country to help
working parents and mitigate against the reduction in supply of childcare places that has arisen
from Covid-19
• Increased investment in services and infrastructure that enable childcare providers to expand
places for children under the age of three
5
CORK CHAMBER | BUDGET 2021 SUBMISSION Decent Work and Economic Growth: SDG 8 In 2021, the continuity of decent work, and the groundwork for decent economic growth, will be linked directly to the effectiveness of pandemic supports. Here we offer improvements to existing schemes and thoughts on additional economic drivers. Business Support Packages for COVID-19 and Brexit • B usinesses that have been part of the TWSS and qualify for the new, replacement, EWSS scheme may have to wait up to seven weeks before they will receive their first payments under the new scheme, creating a cashflow problem. • B usinesses which qualified for the TWSS but do not qualify for the EWSS will see those supports completely withdrawn instead of being phased out in a graduated manner. • T he uplift in qualifying threshold from 25% to 30% is a considerable change that could lead to significant job losses and closures and should be amended. • B usinesses that see a good month occur, will from that point be omitted from the scheme. They should be able to opt back in. For example, some businesses could see a Christmas uplift followed by a devastating Q1. • B usinesses that do not qualify for the scheme now may wish to enter the scheme in Q1. It should be possible to join the scheme for the first time at a later point. • A specific financial support plan and stakeholder response group must be set up for any county or city region should COVID-19 numbers escalate to the point of necessitating localised lockdown. • C hambers should play a central role in response groups, communicating, liaising and guiding business as they have done throughout the pandemic. • P rovision must be made for the extension of the EWSS and rates waiver far beyond the current commitment. • T he effectiveness and duration of all measures must be reviewed in relation to Brexit. 6
CORK CHAMBER | BUDGET 2021 SUBMISSION
Employer PRSI
Employer PRSI rate is currently 11.05% (Class A) and a key feature of both the TWSS and EWSS
is the application of a reduced rate of employer PRSI of 0.5%.
• W
e recommend the introduction of a temporary time bound reduced rate of employer PRSI
across the board of 5.5%.
This would generate savings for employers in terms of managing costs.
It would place focus on retaining the employer/employee relationship as redundancy must be the
last resort as it creates personal and social strain and generates increased social welfare costs.
Using the precedent set by TWSS and EWSS we propose a turnover threshold in terms of the
application of the reduced rate of employer PRSI.
Gift Vouchers for Local Business
Under Irish Revenue’s Small Business Exemption Scheme, Directors and employees can receive a
non-cash bonus of up to €500 once a year.
e propose that for 2021 this is raised to €1,000, subject to local spending criteria to stimulate
• W
local spend in retail and hospitality.
We cite the Cork Chamber giftcard as an example that has ringfenced almost €1million for spend
in the Cork economy since it’s launch in 2018.
7
CORK CHAMBER | BUDGET 2021 SUBMISSION Industry, Innovation and Infrastructure: SDG 9 At a time of growing international protectionism, it is important to make targeted changes to our own national tax system to improve the overall competitiveness of Ireland. Corporate Tax • W e recommend that Government ensure Ireland maintains sovereignty in taxation policy, while working with international partners and the process of OECD actions on Base Erosion and Profit Shifting to enhance fairness in international taxation. • G overnment must maintain and reiterate Ireland’s 12.5% Corporate Tax Rate and offer businesses certainty in the face of global changes. Capital Gains Tax Ireland has one of the highest CGT rates in the EU and that the rate of CGT can influence investment behaviour and economic activity. In 1998, capital gains realised in Ireland were subject to tax at half of the rate they had been a year earlier (20% v 40%). The next year the CGT yield increased by 36%. During the 10 years after this in which the 20% CGT rate applied, Ireland generated an average annual yield from CGT of c.€1.5B. This is just over double the average annual CGT yield between 2009 and 2018 when the CGT rate was substantially higher. • A t a time when Ireland is expected to run a huge deficit given the impact of Covid 19, a significant cut in the standard rate of CGT from 33% to 25% is something which could make a meaningful impact in the generation of tax receipts. To ensure such receipts were generated when needed most, the rate reduction could initially be limited such that it was effective from October 2020 to the end of 2021 only. If the impact of a significant CGT results in a substantial yield increase, the Minister could consider the cost/benefit analysis of the rate continuing at 25% based on the behavioural change evidenced. • A n exemption from CGT for passive investors in respect of interests or shares acquired in a business during 2020/21, where that investment was to provide a cash boost to the business to “see it through” the economic turbulence of Covid-19. We would suggest that this relief could be limited to investments that are realised within a certain time period, e.g. 4 years with tapering of the relief thereafter, to incentivise investors to exit the businesses, and subject to a minimum investment period of 2 years. 8
CORK CHAMBER | BUDGET 2021 SUBMISSION
The logic behind providing such an incentive to investors to exit the business is that many
privately-owned businesses may prefer not to have external investors in their business in the
longer term. This approach would help allay such concerns and also reduce the level of direct
Government support required.
Employment Investment Incentive Scheme (EIIS)
Issues as regards the efficacy of the EIIS and its complex administration have been well flagged
over recent years, many of which still remain following the most recent attempts to enhance
the scheme.
We support the commendable objectives of the Stay and Spend Scheme due to commence on
1 October 2020 and the Government have rightly identified, as evidence by the rising and recent
record highs in the Central Bank’s figures on household deposits, that there is a great deal of
private savings available which can help drive economic recovery. In our view, Government should
not stop there and should take a broader view in the interests of protecting employment and
driving economic recovery.
The private sector can play an increased role which in turn would ease the pressure on public
finances. In particular, the EIIS should be simplified and reformed so it can be used by business
owners injecting capital into affected businesses.
• W
e propose extending the EII to founders and those connected with them would incentivise a
lifeline for businesses and also reduce the level of direct Government support required.
This extension could be limited to those businesses most affected, in a similar manner to EWSS
for example. To make any enhancements effective, the complex and lengthy administration of the
scheme needs to be improved.
Other improvements to the EII scheme should include:
• A
llow losses on qualifying EII investments for capital gains tax purposes
• Increase the annual investment limit
• R
evenue confirmation that a company qualifies for the scheme should become final where
complete and accurate information has been provided to Revenue
9CORK CHAMBER | BUDGET 2021 SUBMISSION Industry, Innovation and Infrastructure: SDG 9 Continued Infrastructural investment Cork Chamber welcomes the indications of increased levels of infrastructural spend in 2021. Road, rail, cycle and pedestrian projects must be brought forward without delay to provide much needed improvements and to boost countercyclical spend in 2021 which will be critical to the construction sector. Quite practically, there is also an opportunity to accelerate work while traffic volumes are lower and disruption to business and commuters can be minimised. • T he Cork Metropolitan Area Transport Strategy must be supported robustly and with delivery focussed urgency via a Cork focused team. Multiple minor interventions such as stretches of cycleway have a huge cumulative impact and must be prioritised in parallel with big ticket items. The Government must create a visible legacy. • T he Dunkettle Interchange is critical carrying over 100,000 vehicle movements per day in normal times. The project will also for the first time, enable cyclists and pedestrians to safely traverse the junction. It is essential that the complementary greenways through Glanmire and Carrigtwohill are completed urgently and in parallel to facilitate sustainable local movement and mid-distance cycle commuting. Furthermore, enhanced bus access to Little Island creates the opportunity to offer a credible bus service finally adding some modal diversity for businesses and communities in the area. • S ubject to a supportive judicial review, a swift positive financial decision for the M28 is critical. • T he M20 must continue to move towards construction as a major piece of inter city and regional connectivity. • N 25 corridor enhancement to include Ballyadam access to enable inward investment. • W ork on the N22 must continue unabated and significant public realm enhancements should be brought to bear in Macroom and Baile Bhuirne upon completion. • S upport must be maintained and potentially enhanced for the Cork Event Centre and new impetus put behind the project which is needed now more than ever. • T he Lower Lee Flood Relief Scheme must be overtly supported, and in particular the delivery of the cornerstone project at Morisson’s Island (subject to a supportive judicial review) • T he City and County Council must be commended for their pedestrianisation, cycle, amenity and outdoor dining measures and be fully supported to continue to deliver on this front. • In the interest of amenity, noise, pollution, road safety, and encouraging more walking and cycling we encourage the Government to introduce 30kph speed limits in our urban areas. 10
CORK CHAMBER | BUDGET 2021 SUBMISSION
Aviation & Tourism
1. To ensure that Cork Airport continues to deliver as a strategic infrastructural asset and regional
economic driver, significant marketing supports must be put in place for route continuity
and development.
2. C
apital projects must be supported by Government as they simply cannot be sustained without
revenue. Cork Airport is excluded from regional airport support and in the current context it is
essential that this is immediately addressed by Government.
3. The recommendations of both the tourism and aviation committees must be thoroughly and
carefully reviewed and implemented as a matter of the utmost urgency.
4. Marketing funds and capital supports alone do not represent a solution for continuity of
connectivity. Without viable passenger numbers airlines will continue to make cold decisions with
an impact that will last for years to come. Once a route or airline is gone, there is little short term
prospect of its return. Steps must be taken to support the return of credible levels of passenger
volume on our key commercial and tourism routes. Testing of passengers must be put in place
to encourage volume and alleviate quarantine restrictions. Healthy passengers could travel safely,
creating much needed continuity of connectivity, and improved local business and leisure
tourism spend.
5. The European Commission has now set a clear direction for commonality of approach to travel
between member states. The Irish Government must be supportive as this proposal moves to the
European Council and push for equivalent international agreements to be progressed with urgency.
Once EU agreement is reached, we must be ready to facilitate the agreed protocols immediately
thereafter. Stability and continuity of approach will be key to the recovery of our international
connectivity and to secure Cork Airport’s future.
11CORK CHAMBER | BUDGET 2021 SUBMISSION Sustainable Cities and Communities: SDG 11 Apartment viability and density must be supported or one of the signature intentions of Ireland 2040 will be proven hollow. It is essential not only in terms of provision of housing in line with best practice planning sustainability and mobility principles but also to boost City Centre commerce by reinvigorating a real living City. Implementation of the shared ownership model proposed in the programme for Government as a priority measure. This will be critical to boosting housing supply and supporting the construction sector throughout the pandemic and beyond. The cost of land, remains a distorting factor for both price at point of sale, and the ability to bring sites to market. We recommend that the Government pursue a contemporary approach to the Kenny report findings, seeking to benchmark against the cost of agricultural land plus an appropriate percentage uplift. The following measures are set out in our joint apartment viability report with CIF, and authored by EY-DKM: • E xpand the Living City Initiative to incorporate newly constructed apartments and target tax relief at owner occupiers and small-scale investors. The Special Regeneration Area of Cork City should be expanded in order to enhance the relief and encourage investment. • R eview the tax regime for small scale landlords to encourage the retention and take up of new apartments in the private rented sector. • C onsideration should be given to providing tax-breaks for investing in innovation and the adoption of new technologies in construction. • E xtend the Help to Buy scheme and introduce a more targeted scheme with higher rebates for buyers of apartments in brownfield areas. • W aive Section 48 (and Section 49, where applicable) development levies for city centre designated areas for a period of up to 2 years to encourage apartment development. This would reduce the cost of a 77 sqm apartment by around €5,300 in total. • P ay market value for Part V and make Part V payments on a staged payment basis as the units are built rather than at closure stage. 12
CORK CHAMBER | BUDGET 2021 SUBMISSION
• C
onsideration should be given to allocating a proportion of the Local Property Tax in the form
of a rebate to builders of apartments in city centres subject to meeting certain criteria
(e.g. affordable pricing).
• R
educing the cost of Irish Water‘s charges for apartment developments as there is less
infrastructure required for apartments than for housing on greenfield sites, yet charges are
the same.
• S
ite assembly to be progressed by Government and/or local authorities, or
• S
ite clearance to be progressed by Government and/or local authorities
• C
ap contribution charge at a certain height or above a certain site density. It is further
recommended here that the Section 48 development levies be waived for city centre designated
areas for up to two years to encourage apartment development.
• E
armark a proportion of the Local Property Tax to forward fund necessary infrastructure required
to service infill/brownfield sites within designated urban areas.
• R
educe the VAT rate for construction on infill/brownfield sites for a limited period of time.
• U
se Urban Regeneration and Development Funding to boost property development in targeted
locations in major cities to support compact and sustainable development.
• C
arry out an assessment of the effectiveness of current building regulations.
• A
ny new building regulations should be carefully evaluated against their impact on viability and
subject to a cost benefit analysis.
13CORK CHAMBER | BUDGET 2021 SUBMISSION Climate Action: SDG 13 Climate change is the single greatest economic and social threat and it is essential that comprehensive steps are taken to pivot to a circular economy. We note that from living cities to equality we focus on measures which contribute to the sustainable agenda, throughout this submission however in the areas of energy consumption and biodiversity, huge strides must be made. • T he RESS scheme should continue to have the highest level of Government support and not only support electricity projects but also the robust overhaul of our gas infrastructure through support for anaerobic digestion and hydrogen power generation and transmission infrastructure. Our environmental reputation is increasingly key to competitiveness in relation to both talent attraction and investment. • D evelop a national strategy for sustainable Anaerobic Digestion (AD) and research the possibility of providing AD low-interest loans or grants relative to the installation costs, to support reducing agriculture emissions. • T he National Broadband Plan is timely and critical to both economic growth and energy consumption patterns. It must be accelerated in delivery. Furthermore, considerable urban areas such as Cork City still do not have universal access to high quality broadband. Locations uncatered to should be incorporated into the programme. • W e propose targeted tax reliefs to improve energy performance of built environment such as enhanced mortgage interest relief for loans which are certified as enhancing BER ratings, 13.5% refund on sustainable refurbishment work, and tax depreciation for sustainable office developments. • C ontinued robust support for e-mobility incentives and active mobility. • S upport for swift and full implementation of the Waste Action Plan for a Circular Economy. 14
CORK CHAMBER | BUDGET 2021 SUBMISSION
Cork Chamber’s
Budget Committee
Our thanks to the budget committee who have volunteered their time
to help prepare this submission.
» Seamus Downey, EY (Chairperson)
» Stephen Keohane, KPMG
» Julie Healy, KPMG
» Paul Dunlea, Deloitte
» Joanne O’Brien, Deloitte
» Andrew O’Brien, PWC
» Catherine Desmond, PWC
Thank you to our members, for informing our quarterly Economic Trends, which is invaluable in
the development of our submissions.
Thanks also our Board, Public Affairs Council and Partners for guiding, validating and supporting
a progressive policy agenda for the Cork business community.
15CORK CHAMBER | BUDGET 2021 SUBMISSION Fitzgerald House, Summerhill North, Cork, T23 TD90, Ireland. T +353 (021) 4509044 E info@corkchamber.ie CorkChamber.ie
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