vOICEs

Young

IN A CHANGIN

G

IRELAND

CONTENTSPresident’s Introduction

Department of Agriculture, Food and the Marine

Department of Education and Skills

Department of Environment, Community and Local Government

Department of Finance

Department of Health

Department of Jobs, Enterprise and Innovation

Department of Public Expenditure and Reform

Department of Social Protection

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YOUNG VOICES IN A CHANGING IRELAND

42

YOUNG FINE GAEL PRE BUDGET SUBMISSION 2012/2013PRESIDENT’S INTRODUCTION

The budget for 2013 promises to be a diffi cult challenge,

made necessary by our continuing economic distress.

At times like these it is often easy to shy away from the

most necessary and most uncomfortable decisions. In this

Pre-Budget Submission, Young Fine Gael (YFG) asks that

the government take to the task of reforming Ireland with

renewed vigour and focus.

In crafting this submission, members of YFG refl ect the de-

sire of people across Ireland for signifi cant, meaningful and

long lasting change. This Budget can be a substantial part

of positively changing how the state conducts its business.

YFG has a long record of campaigning vigorously for just

causes and has always maintained a conscience focused

on the general best interests of the nation. This submission

continues that tradition but with a focus on the new issues

facing younger members of our society. The recent Chil-

dren’s Referendum has moved forward the youth agenda

signifi cantly and while this is an ongoing body of work,

many of today’s issues surround youth unemployment

training and the creation of a sustainable economic future.

The submission that follows is a refl ection of many issues

concerning young Irish people, as well as outlining many of

the things they feel offer solutions or alternative methods

while refl ecting the long-term best interests of the country.

I would like to thank all the members of YFG and, in partic-

ular, the Policy Offi cers of the National Executive for their

efforts in compiling this document.

Patrick Molloy

53

DEPARTMENT OF AGRICULTURE, FOOD AND THE MARINECAP

YFG asks the Government to lobby for provisions in

CAP to be made to young, trained and active farmers

as challenging re-negotiations get underway.

Many countries will lobby for a reduction in this

area in general; we commend the Government’s

commitment to CAP in what will be a tough and

challenging negotiations process.

YOUNG FARMERS INITIATIVE

Ireland has an excellent reputation abroad for the

quality of its food produce, ingredients and fi nished

food products. As a result of this reputation,

more young people see agriculture as a viable

and rewarding career choice. However, only 7%

of farmers in Ireland are under 35 years of age

and the Government should be more active in

encouraging young people to choose it1. Necessary

resources should be allocated to agricultural

training colleges to increase take-up of courses.

The Government should ensure that farming is

properly marketed as a way of life as, not only are

young farmers partaking in a growing industry, but

farmers also live longer and have considerable

input to climate change2.

DEPARTMENT OF EDUCATION AND SKILLSEDUCATION AND SKILLS

Irish universities must be proactive in creating

an education system that’s end goal is training

students to gain employment, as well as assisting

those who are interested in setting up businesses.

In some cases, this may be as simple as the

provision of open lectures or optional modules

on how to maintain proper accounts or comply

with employment law. These lectures or modules

should be available to all students to foster

entrepreneurship and prepare people to run a

business.

STUDENT UNIVERSAL SUPPORT IRELAND (SUSI)

YFG wishes to express its dissatisfaction with the performance to date

of the new centralised body for processing student grant applications,

SUSI. It was recently admitted at the Joint Oireachtas Committee that

the system had proven to be fl awed for 2012/2013 grant applications, as

only one in three applications were processed3. This centralised system

must be adequately resourced in terms of staffi ng to deal with the infl ux

of applications annually, if necessary by secondment of civil servants for

the necessary period.

TECHNOLOGY COURSE INCENTIVES

YFG proposes that the Government consider options for increasing

second level student uptake in Computer Science and Technology

courses at third level. It is one of the few sectors in our economy where

there is a shortage of qualifi ed entrants and is an industry that the

Government is targeting in terms of Foreign Direct Investment (FDI)

to Ireland. YFG also proposes that the Government introduce a pilot

project in one of the universities in Ireland with reduced fees for related

technology, innovation and computer science courses, in order to

establish if this is a proposal worth introducing nationwide.

DEPARTMENT OF ENVIRONMENT, COMMUNITY AND LOCAL GOVERNMENTNEW HOME SUSTAINABLE ENERGY AUTHORITY OF IRELAND

GRANTS

YFG proposes that persons building new homes be entitled to the same

grant entitlements in relation to renewable energy and energy effi ciency

implementation as those receiving grants who are in their homes for

more than 5 years. The excess burden to build in accordance with

environmental law should be assisted by the Government by providing

them with the same entitlements as those with pre-existing buildings.

EXCISE DUTIES ON TRADING FUEL - ESSENTIAL USER FUEL

REBATE

The Government currently takes 59.62c out of every 159.9c charged

per litre of petrol and 48.57c out of every 154.9 per litre of diesel4

in fuel duty. For hauliers, half of their total costs comprise of fuel

costs5. This has proven to be unsustainable for the industry, with

many haulage companies ceasing trading in recent months and

years. Those hauliers surviving this period frequently resort to getting

fuel abroad, which is a loss to the exchequer according to the Head of

the Irish Road Haulage Association6. According to a Deloitte report in

2011, 95% of Irish freight is transported via road7. This demonstrates

the importance of the haulage sector to the greater economy.

1 http://irishfarming.ie/2012/11/04/ireland-grapples-with-farming-age-crisis/ 2 http://irishfarming.ie/2012/11/04/ireland-grapples-with-farming-age-crisis/ 3 http://www.irishtimes.com/newspaper/breaking/2012/1113/breaking14.html 4 http://www.pumps.ie/FAQPricesExplained.php 5 http://www.irishexaminer.com/business/fuel-tax-take-driving-hauliers-to-wall-191497.html 6 http://www.irishexaminer.com/business/fuel-tax-take-driving-hauliers-to-wall-191497.html 7 http://www.oireachtas.ie/parliament/media/committees/transportandcommunications/JCTC-Report-on-the-Road-Haulage-Industry-in-Ireland-(Published-25.10.12).pdf

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A tax rebate on fuel would create a more level

playing within the EU. Five EU member states

have fuel rebates for the industry - Spain, France,

Belgium, Hungary and Slovenia. There is provision

in an EU Directive under Energy Tax that allows for

vehicles that carry over 7.5 tonnes to have rebate

on fuel duty.

The Joint Oireachtas Committee on fuel duty tax

rebate recommended that a fuel duty rebate would

alleviate pressure in the haulage industry and

would be fi scally prudent and YFG calls on the

Minister to consider this proposal.

PROPERTY TAX

YFG fully supports the Government’s proposal

to re-introduce residential property taxes, as

set out under the EC/ECB/IMF guidelines and

supported by highly reputable organisations such

as the Organisation for Economic Co-Operation

Development (OECD)8.

While there exists a short-term challenge with the

re-introduction of the tax in the midst of fi nancial

adjustment, it is imperative that Ireland learns

from the past and ensures we are not at the mercy

of a property bubble again in the future. In the long

term, the introduction of a property tax will provide

a reliable and consistent stream of revenue to

safeguard valuable public services.

Budget 2012 saw the introduction of the

‘Household Charge’, which proved quite unpopular

with the public, as it was not a progressive tax, with

everyone liable for the charge paid the same rate.

The Household Charge introduced in Budget 2012

gave the Government valuable information on

property ownership for the long term proposal of a

fully-fl edged property tax.

WHAT METHOD SHOULD BE USED?

YFG advocates the Site/Land Valuation Tax method

of Property Tax. This method considers the value

of the land or site on the property, rather than

merely the value of the building on it. Hence, any

commercial activity or an expensive holding on the

land would be refl ected fairly for tax liability due.

It is the most progressive and fair of the methods

outlined in the Commission of Taxation Report

20099. It can be tapered to refl ect ownership by

OAPs, or in respect of income below a certain level

so as not to impose an unfair and excessive burden.

THE FUTURE OF STAMP DUTY

YFG believes that the future of stamp duty should be zero-rated for

Principle Private Residence purchases, but should be retained for

Non-Principle Private Residence purchases and for land zoned for

development.

WHO SHOULD BE EXEMPT?

We propose that the following groups be exempted in full or in part from

the Property Tax: low income families and families in social housing.

Those with negative equity mortgages and in mortgage arrears should

be considered for deferment of payment until disposal of asset10.

WHO SHOULD COLLECT THE TAX/OPTIONS ON PAYMENT?

For the initial introduction of the tax, we propose that the Revenue

Commissioners should collect it, to ensure maximum compliance.

According to Minister Hogan, as of 12th October 2012, 59% of those

liable for the Household Charge have paid it11. This yielded €90 million

out of the budgeted €160 million. The new tax proposal would yield

€500million12. The Revenue Commissioners have the necessary audit

control in place to assure maximum planned yield for the Government.

The OECD indicates, that for maximum compliance, the tax should

be deducted at source13. All yields should be repatriated to Local

Government, as the vision set out in Fine Gael’s New Politics14.

Payment of the tax should be at quarterly intervals unlike the Domestic

Rates abolished in the late 1970’s and this should be done via the ROS

system and/or the PAYE system via tax credit reductions.

DEPARTMENT OF FINANCEBANKING

There is still strong public anger towards the banking sector. Given that

the State partially or largely owns the two pillar banks, YFG feels that

the Public Interest Directors and the Minister should act and moreover,

should be seen to act more for the taxpayers interest, while preserving

the need to restore the institutions to viability and stability.

Under the Credit Institutions Act 2010 Section 51, “nothing in this Act or

in any other enactment, and no rule of law, prevents the Minister, when

providing a fi nancial support facilitated by this Act or pursuant to any

other enactment, from imposing any terms and conditions which any

other provider of fi nancial support to the relevant institution concerned

would be entitled to impose or which the Minister considers desirable to

impose in order to protect the public interest” 15.

In relation to any institutions that have received state support through

this act, we believe that the Minister or Public Interest Directors should

request a full and comprehensive review justifying why an institution

plans to impose an increase on variable mortgage interest rates. This

review should be explicit in outlining how the long-term viability of the

institution and the interests of the taxpayer are factored into the rationale.

If the Minister deems the rationale suffi cient for the interests, both the

8 http://www.oecd.org/eco/surveys/irelandcomingoutofthecrisisbutchallengesremain.htm 9 http://www.publicpolicy.ie/wp-content/uploads/commission-on-taxation.pdf 10 http://taxpolicy.gov.ie/wp-content/uploads/2011/06/10.09-Property-Tax.pdf 11 http://www.moneyguideireland.com/category/property-tax 12 http://www.irishtimes.com/newspaper/ireland/2012/1105/1224326140614.html 13 http://www.oecd.org/tax/taxadministration/48449751.pdf 14 http://www.fi negael2011.com/pdf/NewPolitics.pdf 15 http://www.irishstatutebook.ie/2010/en/act/pub/0036/print.html

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viability of the institution and the taxpayer, then

YFG requests that the review be released into the

public domain, in full or in part. We feel this move

would help to make the public more confi dent in

once very trusted institutions in the state.

In relation to bonuses and pensions, we welcome

the Government’s attempts to request former

senior executives to return their excessive payments

back to the exchequer. We acknowledge the legal

constraints in relation to legacy bonuses and

pensions, however, YFG calls on the Government to

utilise the Public Interest Directors more especially

in future decisions where the taxpayer is. One of the

purposes of the Credit Stabilisation Act 2010 is “to

address the compelling need to restore confi dence

in the banking sector; to protect the taxpayer.”’ The

Government, via the Public Interest Directors or the

Minister, should take this into account, along with

the explicit statement in the Credit Stabilisation

Act 2010 in relation to bonuses “that such bonuses

are unlikely to have been paid if the State had

not enabled the relevant institution to meet its

fi nancial and regulatory obligations through the

provision of fi nancial support” 16 . The Government

should ensure that legacy bonuses are not paid out

using State fi nancial support. This provision sets

out the governance of this issue, proving it is the

responsibility of the Public Interest Directors via

the Minister to ensure this is complied with.

YFG welcomes the Department of Finance’s

initiative to hire Mercer as consultants to review pay

in the banking sector in a benchmarking exercise.

Even though we would like the €500,000 pay

barrier for bank executives not to be broken, YFG

welcomes Minister Noonan’s efforts requesting

the IBRC executives to consider pay cuts17.

DEPARTMENT OF HEALTHMENTAL HEALTH

YFG wishes to ensure that the Government does

not abandon proposals outlined in A Vision For

Change. The 8.4% spending on mental health

outlined in the Vision for Change proposal should

be the minimum objective for the Government for

2013 and the Government should take all necessary

steps to eliminate the stigma attached to mental health in Ireland.

There is a need to examine the current provision of community based

Child Adolescent Mental Health Service (CAMHS) teams to provide

support for schools. This issue remains a priority for young Irish people

and improvements to that system would have considerable impact on

the health and happiness of young people for the rest of their lives.

YFG believe the government need to maintain focus on young people

and to identify preventative measures such as mental health training

and bullying prevention training for those who have dealings with young

people and more education for young people about maintaining their

mental health.

TAX ON SATURATED FATS AND SUGARY DRINKS

An Oireachtas study found that 66% of all Irish adults, 22% of 5-12 year

olds and 20% of teenagers (13-17 years) are overweight or obese18.

Recently, a University College Cork study on behalf of SafeFood found

that obesity is costing the State over an estimated €1.1 billion in direct

and indirect costs19. The main contributors to our obesity problem are

a lack of exercise and unhealthy eating habits. Weight problems for

children create huge risk to their general health and well-being later in

life, as the chances of remaining overweight or obese into adulthood are

large. Cardiovascular disease and type 2 diabetes are among the other

health problems heavily linked to weight problems20.

A study has been conducted on the potential income from these taxes

and a yield of €79.91 million has been estimated from saturated tax,

while €95.1 million has been estimated from fat tax. At an individual

level, the imposition of the tax could mean €0.05 on a tub of butter,

€0.03 on a bar of chocolate and €0.02 on a two litre bottle of sugary

drink21. Whatever revenues are generated from such a tax should be

reinvested in measures to increase awareness of the problems caused

by obesity, the measures that can be taken to rectify it and to subsidise

healthy foods.

HOME HELP

YFG opposes any further cuts to home help in the upcoming budget.

Older people or people with a disability are most often those in receipt of

home help and this measure ensures, in many cases, that such persons

do not require hospital beds, already in excessive demand and have a

better quality of life in their own homes. Home help is an area of massive

concern to the public and one that cannot afford to face further funding

cut.

16 http://www.irishstatutebook.ie/2010/en/act/pub/0036/print.html Part 7 Miscellaneous 17 http://www.irishtimes.com/newspaper/ireland/2012/1110/1224326409015.html 18 http://www.oireachtas.ie/parliament/media/housesoftheoireachtas/libraryresearch/spotlights/spotObesity071111_150658.pdf 19 http://www.safefood.eu/News/2012/New-study-reveals-the-annual-cost-of-overweight-an.aspx 20 http://www.who.int/dietphysicalactivity/childhood_consequences/en/index.html 21 http://www.irishtimes.com/newspaper/frontpage/2012/1015/1224325260414.html

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DEPARTMENT OF JOBS, ENTERPRISE AND INNOVATIONJOB CREATION AND ENTREPRENEURSHIP

Creation and retention of jobs is the highest priority

for the Coalition Government since coming into

offi ce and this must remain a focus throughout

Ireland’s period of the EU Presidency. Ireland’s

unemployment rate of 14.8% is still stubbornly

high though the stabilisation of this rate is a

welcome development22. Unfortunately, emigration

of Ireland’s youth is a factor in this stabilisation.

Employment not only contributes positively to PRSI

and income tax, but it also reduces the cost of

social welfare and. It also has a substantial positive

effect on people’s confi dence and dignity. Irish

people have a great sense of pride in their work

and strive for responsibility and opportunity. The

Government must continue to assist further job

creation and create an economy that competes as

best it can, given the limited monetary resources at

our disposal.

This year we have seen the Government’s launch

of the Action Plan for Jobs 2012. This plan outlined

measures to help found and develop indigenous

businesses and to attract and incentivise Foreign

Direct Investment (FDI) into Ireland. In light of

the volatile domestic and international operating

climates, we believe it vital to create and harness

the conditions to ensure that that Ireland “is

open for business” and that it remains “open for

business”.

The Government’s Action Plan for Jobs 2012

introduced reliefs for start-up companies; the

Employment Investment Incentive Scheme (EIIS);

Seed Capital Relief; R&D relief for employees;

and Foreign Earnings Deduction, amongst others.

We believe that these reliefs, together with the

retention of Ireland’s corporation tax rate of 12.5%,

a highly educated workforce, and our prominence

as an English-speaking member of the European

Union with a potential market of over 500,000,000

people23 all contributed to positive job creation

announcements by Paddy Power, Paypal, Twitter

and many more. In Q2 2012, service exports rose

9% compared with the previous year24.

However, it is imperative to keep in mind that

70% of Irish employment in the private sector

is in the Small and Medium Enterprises sector

(SMEs constitute less than 250 workers). Despite the relatively strong

performance of the services sector and multinationals based in Ireland,

it does not account for with the performance of the Irish economy

as a whole. The gap between GDP and GNP expanded signifi cantly

between 2009 and 2011. GDP takes into account multinationals profi ts

whereas GNP does not. In 2011, nominal GDP was 20% higher than

GNP, compared to 2009 where it was 14%25. Further adjustments to

Government schemes below and introduction to new measures can

impact positively on the domestic economy.

EMPLOYMENT INVESTMENT INCENTIVES SCHEME (EIIS)

YFG believes that the EIIS, in its current format, does not support the

outlined objectives to create jobs, source fi nance and produce profi ts by

indigenous companies. As of 12/06/2012, only a measly 11 companies

qualifi ed for the scheme26. Factors contributing to this are the volatile

investment climate, lack of awareness of the scheme and the barriers

for qualifi cation. This scheme must be fundamentally reviewed to ensure

it achieves the objectives of Government.

According to members of Ireland’s accountancy bodies, potential

investors are not encouraged to invest when the scheme’s headline tax

relief is heavily restricted by the High Income Earners’ Restriction27. In

light of the curtailment of pension tax reliefs, there will be an increase

in demand for tax relief investment vehicles. To realise the scheme’s

potential, it should loosen its ties with the High Income Earners’

Restriction. Since this is the group more likely to invest in a scheme like

this, it is not advisable that they are unable to claim the relief. A reformed

EIIS should be compelled to focus on the business that could benefi t and

not the individual taxpayer. Also, it should take into consideration that

the relief should be paid up front.

The UK has a scheme similar to the EIIS which allows this type of relief

and their scheme is perceived to be more valuable and more likely to

yield investment28. Called the Seed Enterprise Investment Scheme, it

concentrates on smaller companies in their infancy. Stakeholders whose

shares total less than 30% of the company’s overall shares can claim

tax reliefs. Companies with 25 or fewer employees and assets of up to

£200,000 can apply for the relief under the scheme. The introduction of

this scheme in the UK demonstrates their seriousness in supporting

small enterprises.

Similar schemes to the EIIS operating in Austria and the Netherlands

have attracted favourable investors by mitigating risk and attracting

capital by guaranteeing proportionate losses. The introduction of such

a scheme would attract non-traditional investors to our shores. YFG

believes that such a scheme should be rolled out between 2013 and

2015.

PROFESSIONAL SERVICE COMPANIES AND EIIS

At present, professional service companies are not eligible to apply for the

EIIS29. Many professional service companies are running on an overdraft

or loan fi nancial model and they feel they are discriminated against as

they can utilise outside investment for equally worthy investment as

22 http://cso.ie/indicators/Maintable.aspx 23 http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tps00001&tableSelection=1&footnotes=yes&labeling=labels&plugin=1 24 http://www.davy.ie/content/pubarticles/econ20121025.pdf 25 http://www.davy.ie/content/pubarticles/econ20121025.pdf 26 http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2012061200120?opendocument 27 http://www.charteredaccountants.ie/Global/TAX/CCAB-I%20Pre%20Budget%20Submission%202013%20signed.pdf 28 http://www.ibec.ie/IBEC/Press/PressPublicationsdoclib3.nsf/vPages/Newsroom~budget-2013-any-increase-in-labour-costs-will-hit-recovery-27-09-2012/$fi le/IBEC+Budget+2013+Submission+-+low+res.pdf

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companies who qualify for the scheme. YFG calls

upon the Minister to allow professional service

companies to apply for the EIIS.

SEED CAPITAL RELIEF AND EIIS

Seed Capital Relief and EIIS are the only tax

reliefs available to a manager/owner since the

abolishment of income tax relief for loans used

to invest in companies. Seed Capital Relief,

along with the EIIS, are predicated upon the idea

that the owner of the shares holds onto them

for a minimum of three-years. This is a sensible

minimum period for a third party investor, but not

for an owner/manager.

Minister Richard Bruton mentioned at the 2012

Chartered Accountant’s Annual Conference

that only 63 out of a possible 1200 new start-up

companies availed of the Seed Capital Relief30. On

those fi gures, it suggests that the scheme is not

being utilised.

Generally speaking, many owner/managers have

to invest in their company via a loan. In order to

get a return on their investment, they have to

sell their business in order to realise a return

on their investment. This is not very attractive

for potential investors who might have worked

hard for 3 years in a venture that they will then be

forced to dispose of.

YFG believes that the Seed Capital Relief scheme

should serve to qualify investment by a loan for

long-term development of the business, while

keeping the entrepreneur involved in the venture.

The potential new structure could involve a new

defi nition of investment of 20% instead of the

current 30% and address any concerns on the safe-

guarding of genuine use on a loan/equity ratio to

the holding period. See table below as an example:

To ensure that the focus of the scheme is to create jobs, mechanisms

should be in place to ensure the original reasons for acquiring the

loan are adhered to. The introduction of a preclearance vehicle should

be required for any refi nancing of the loan. Relief clawback should be

available to the state in the event of refi nancing the loan for personal use

or paid back before the requisite period.

YFG believes the EIIS model does have potential to be a greater catalyst

in smaller and medium enterprises for job creation, development and

evolution. The Action Plan for Jobs 2012 outlined that the EIIS should

“assess if any amendments are required” and YFG believes that these

amendments could ensure the scheme exploits its full potential31.

STATE-BACKED INVESTMENT/ ENTERPRISE BANK

Canada, the US and Germany have State Backed Investment/Enterprise

models in operation. Ireland needs lending facilities that provide a

growth-orientated credit facility. It would give businesses with potential

and positive growth more confi dence and when seeking lending. A new

investment bank entering the market would increase the equity and

debt sources available to enterprise. The bank would be funded by the

European Investment Bank and the National Pension Reserve Fund.

RESEARCH AND DEVELOPMENT TAX CREDIT AND RELIEF

Ireland is operating in an open market at the edge of the Eurozone to

which we contribute approximately 1% of the Eurozone’s GDP. Given this

background, it is imperative that we are as competitive as we can be.

The R&D tax credit and relief is an important component in the decision-

making process of multinationals when choosing their location. It will

also be supportive of indigenous companies engaged in R&D. The

effectiveness of the R&D relief is proven, as the number of companies

claiming it doubled in the two year period 2008 and 201032.

INCREASING ELIGIBILITY FOR R&D QUALIFIED EXPENDITURE:

YFG believes that R&D tax relief, in its current form, does not reward

standard business practice. Given the unpredictable nature of R&D and

the current trend of streamlining in businesses, it is often necessary to

hire contract employees to carry out R&D work. Business managers do

not view contract employment as outsourced expenditure, therefore, the

qualifi ed expenditure should refl ect this sentiment.

R&D TAX RELIEF FOR EMPLOYEES:

Presently, the R&D Tax Relief for employees is only available to high

earners and large companies. According to the CCAB-I Pre Budget

Submission 2013, an employee would have to earn at least €70,000 to

qualify for the relief. Average salary for a process chemist is between

29 https://www.enterprise-ireland.com/en/Invest-in-Emerging-Companies/Source-of-Private-Capital/Revenue-Employment-Incentive-and-Investment-Scheme.pdf 30 http://www.charteredaccountants.ie/Global/TAX/CCAB-I%20Pre%20Budget%20Submission%202013%20signed.pdf 31 http://www.djei.ie/publications/2012APJ.pdf Page 54 32 http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2012061200122?opendocument

YEAR LOAN % EQUITY %

1 3 17

2 6 14

3 9 11

4 12 8

5 15 5

10

€45,000- €55,000. YFG believes this discriminates

against lower paid employees, compared to an

R&D Director who contributes valuable talent

and innovation to the long-term viability of the

business. For this relief to be more of a progressive

nature, it should be amended to include those on

lower salaries of €70,000.

It is at the early stage of a company cycle that the

most crucial phase of the R&D takes place. This

is the time when it is most diffi cult for a company

to accrue profi tability. However, the current R&D

tax relief only applies to companies that accrue

profi tability. If this impediment is removed, the

relief would be benefi cial to smaller indigenous

companies.

BASE YEAR RESTRICTION:

YFG advocates a change to the base year 2003 upon

which R&D tax credit is calculated incrementally

over the base year. If companies were given the

autonomy to choose their base year, it would give

them more incentive to conduct R&D activities

at a low cost33. The disadvantage of companies

with high level R&D long-term compared with

companies established after 2003 with low level

would be removed. There is no real logical rationale

for using the base year 2003 and a more favourable

incentive should be put in place.

YOUTH ENTREPRENEURSHIP

There is a clear need to provide a better

environment for to foster entrepreneurship among

young people. The introduction of a credit review

board has provided a reasonable and cost effective

measure of ensuring viable businesses will be

able to gain access to funding. YFG also welcomes

reduction of the duration of bankruptcy.

The specially introduced VAT rate for the Tourist

and Hospitality sectors is of signifi cant value for the

sector, in terms of job retention and investment in

new businesses, and we hope for the continuation

of this34.

DEPARTMENT OF PUBLIC EXPENDITURE AND REFORMPUBLIC EXPENDITURE FUNDING

In the midst of continuing cutbacks and increasing taxation measures

necessary to restore fi scal rectitude to state fi nances, the public would

be more supportive if more adjustments were made at the top. It is a

notable aspect of leadership culture that people are happier to follow if

they are lead by example; in the past few years Irish people have been

proven to be quite pragmatic and motivated in improving our economic

outlook. We believe the Government’s job of implementing fi nancial

adjustment would be easier for the electorate to accept if its own

capitation guidelines for special advisors were applied as far as possible

and a vouched expenses system apply across the board in politics.

CROKE PARK AND ALLOWANCES IN THE PUBLIC SECTOR

There remains a continuing disparity between the need to fi nd savings

and the protection of highly-paid civil servants. YFG believes that the

Article 1 Subsection 28 of the Croke Park Agreement can and should be

enacted. YFG opposes the extension of the Croke Park Agreement and

calls for it to be substantially renegotiated.

In any future agreements, there must be a broader awareness of the

larger issues impacted by the agreements, and an acceptance that

further reductions in the overall level of expenditure of the state are both

necessary and benefi cial in the long term. The continuing payment of

excessive wages and the consequential impact on necessary services

caused a clear detachment of the senior civil service from the realities

facing many Irish people and families.

ANY FUTURE AGREEMENT MUST THEREFORE REFLECT:

• The need to protect lower-paid public sector workers who have

been used to protect the excesses that exist within the public sector

pay bill by tying the higher paid civil servants’ wages to those of

secretaries general and other highly paid offi cers who earn more

that the Taoiseach and President.

• A recognition that there needs to be a continuing scale that will

refl ect the real-time value of wages within the greater economy.

• An explicitly stated premium that identifi es the value of job security

at a time of widespread lack of job security. This is to be deducted

from overall pay.

• A re-alignment of wages to account for allowances that in effect

represent core pay but which previous governments have failed to

deal with.

• The removal of additional allowances that are

a) not related or refl ected in the amendment proposed to core pay,

b) do not relate to generally accepted premiums based on work

hazard or exceptional circumstances.

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• An acknowledgement of the inter-

generationally inappropriate premiums and

an according realignment so as to refl ect a

comparatively fair reduction in overall wage

levels that does not penalise younger entrants

in favour of longer-serving staff. Some new

entrants may be more skilled or qualifi ed than

their colleagues, making this situation even

more unfair.

• A complete overhaul of the structure of

promotions and the removal of increments in

place of independent overall assessment.

QUANGOS

YFG believes it is vital that the Government continue

to strive to reduce the number of quangos and to

increase effi ciency in quangos. Taxpayers want to

see a productive and effi cient in return from all

public investment.

TAX TRANSPARENCY

YFG welcomes the recently proposed bill on tax

transparency. The introduction of an assessment

showing how taxpayers how funds are used

will provide a greater degree of understanding

amongst taxpayers as to importance of developing

long-term fi scally prudent policies and plans.

DEPARTMENT OF SOCIAL PROTECTIONCHILD BENEFIT

YFG proposes that the Minister for Social Protection

introduce a gradual cut in Child Benefi t over the

next year, with the end result being a tiered system

of allowance, based upon a family’s income. The

highest Child Benefi t payment for low income

families should not exceed €120 per month.

Following the introduction of the tiered system, no

family should receive less than half the maximum

payment per month, because if the benefi t were

to be cut altogether for middle and high income

earners, the impact on the middle class would

prove unjust.

The revenue saved through the implementation

of a tiered system should be invested in children’s

future through investment in the primary and

secondary education systems.

FIRST COMMUNION AND CONFIRMATION ALLOWANCE

First Communion and Confi rmation Allowances are unnecessary

entitlements that serve no purpose. As Ireland moves towards become

a more diverse and secular society, it is unjust to provide members of

a particular religious faith with allowances to celebrate such religious

occasions, when there is no provision for similar occasions celebrated in

other religions. This should not be something that the average tax payer

contributes to in society and YFG advocates removing these allowances

in full.

SOCIAL PROTECTION FOR SELF-EMPLOYED

Ireland now needs to fl ourish and this requires a greater level of

assurance that those who try to create jobs will not be crippled for

bringing about new Irish business and new employment. YFG strongly

recommends that the Irish government examine the lack of access

to social protection provisions for those who are self-employed. This

safety net is afforded to a great many people and accordingly should

not exclude those are working to create jobs through entrepreneurship.

Fine Gael National Headquarters51 Upper Mount Street, Dublin 2

Phone: 01 619 8444 Fax: 01 662 5046 Email: yfg@yfg.ie Web: www.yfg.ie