Fianna Fáil Finance Spokesperson Michael McGrath has called for tax relief to be introduced for people who successfully set up a new business and subsequently sell it on.
Deputy McGrath stated, “The State currently makes almost no distinction between genuine risk takers who set up a new business and take on all the risks that come with that, and passive investments in property based schemes. In the last budget the Minister extended the exemption from capital gains tax for land or buildings held for at least seven years on purchases up to 31 December 2014. While this may encourage more buy to let investors into the housing market and land speculators, it does nothing to support a genuine enterprise culture in the country.
“The Minister introduced a very limited relief for entrepreneurs who build up their business from scratch and subsequently sell it on. The relief is extremely restrictive in nature and the fact that the proceeds must be invested in a new business but the second company cannot be involved in an activity previously carried on by the entrepreneur renders it almost useless.
“We know that Ireland does extremely well in terms of foreign direct investment but we give much less importance to business start-ups. According to a Global Entrepreneurship Monitor 2011 study only 8.5% of Irish people aspire to owning their own business. That is one of the lowest rates in the OECD and is about half that of the US. The reality now is that Ireland is not the location of choice for high potential start-up enterprises and our tax system is partly responsible for this.
“One practical way the State can affirm the value it places on entrepreneurs is to reduce the rate of capital gains tax that applies when a successful business is sold. The rate of capital gains tax has been rising steadily in the last few years but the yield has been falling year after year. Fianna Fáil proposes to cut capital gains tax from 33% to 15% for business start-ups up to a maximum of €10m. This would target the measure at local job creating SMEs and help underpin an environment where people with new ideas are encouraged to take the risk of starting their own business. We need to create a culture that celebrates success and we can do this by placing a far greater emphasis on rewarding enterprise risk takers.”