Budget 2016 “hits the bullseye for startups, entrepreneurs and jobs”, as it incentivises innovative startups, rewards successful entrepreneurs and makes sure that the jobs that are created will really pay, Minister for Jobs, Enterprise and Innovation Richard Bruton TD said today.
Minister Bruton together with Minister of State for Business and Employment Ged Nash TD and Minister of State for Research Innovation and Skills Damien English TD today held a press conference to unveil details of the Jobs, Enterprise and Innovation elements of Budget 2016.
Among the new pro-jobs taxation measures announced today are:
- Reduced Capital Gains Tax rate of 20% for successful entrepreneurs
- Reductions in the USC affecting middle-income workers and creating jobs
- Income tax credit of €550 for self-employed people, with improvements in future years
- Knowledge Development Box – globally ‘best in class’ and first OECD-compliant scheme,competitive rate of 6.25% on qualifying income, benefits for SMEs, in place from 1st Jan 2016
- Extension of tax relief for start-up companies
- Employment and Investment Incentive scheme to increase availability of investment finance for business – extension of scheme to include all geographical locations, and increase thresholds
Ministers Bruton and Nash also announced that they had secured Government agreement to increase the National Minimum Wage by 50 cent to €9.15 per hour. This follows the recommendations of the Low Pay Commission in July. Minister Nash signed the order this afternoon which will increase the hourly rate from the 1st of January. More than 120,000 people will benefit from the increase.
In order to ensure that workers see real changes in their pay packets, a PRSI relief of a maximum of €12 per week has been announced, commencing at income of €352.01 and tapering out fully at €424. Furthermore, in order to avoid unnecessary increases in costs on business the employer PRSI threshold is being increased from €356 to €376 per week.
Over 60,000 gross new jobs will be supported by the capital budget of the Department of Jobs, Enterprise and Innovation next year, with measures including:
- Continued rollout of 8 regional jobs plans backed by €250million in capital investment
- IDA Ireland – target of 175 new investments in 2016, leading to over 15,000 gross new jobs
- Enterprise Ireland – target of 13,000 gross new jobs and total exports of €22billion in 2016
- LEOs - over 4,000 additional jobs in 2016
- Science Foundation Ireland – train 3,000 researchers and ongoing €355million investment with industry in 12 world-leading large-scale Research Centres
These measures form part of an overall capital envelope of €3billion secured by Minister Bruton for his Department and its Agencies as part of the capital plan announced recently. Reflecting the priority assigned by Government to the jobs agenda, the Jobs, Enterprise and Innovation capital spend has been protected over the recent years of declining capital spend across Government. The Department has also secured an additional capital allocation for 2015.
Speaking today, Minister Bruton said: “The last few years have been tough for people right across the country, but the moves that we have made through successive Budgets and Action Plans for Jobs have made it possible for us to exit the bailout and get jobs growing again. The challenge now is to keep the recovery going and accelerate the rate of job-creation so that people across the country feel the benefits.
“This is a great budget for jobs. A series of tax changes that I have argued for, which will make a real improvement for start-ups and growing businesses, will be implemented. These include cuts to the USC for middle-income earners, changes in tax treatment for the self-employed, reduced capital gains tax for business and a new best-in-class Knowledge Development Box will encourage more people to start a business and help businesses to create more jobs. The continued protection of my Department’s capital budget over the crisis years means we can invest in new supports for job-creating businesses.
“Finally – we must ensure that work pays. The modest but significant increase in the minimum wage, following the recommendation from an evidence-based report by experts, will make a real difference to the living standards of thousands of people across the country. Crucially it will also help ensure that work always pays”.
Minister Nash said: “Job creation continues to be the first priority of this Department and this Government. But alongside this drive towards full employment, we are committed to sharing the benefits of our economic recovery and making sure work pays, particularly for low and middle income earners.”
“I have signed the order which paves the way for the new National Minimum Wage rate of €9.15 per hour to be introduced from the 1st of January. This is an increase of 5.8% for the lowest paid in our economy. Some 120,000 low paid workers can expect to see an increase in their pay packets as a result of this increase alone; those working full-time will see more than €1,000 of a pay rise on an annualised basis. As a result by the year’s end we will have twice increased the minimum wage since entering Government, increasing the pay of a full-time worker on the minimum wage by €60 a week or more than €3,000 a year.”
Minister English said: “Ireland’s future economic growth and prosperity will depend in very large measure on our continued investment in science technology and innovation. This investment is all about developing a competitive knowledge based economy and society, driving innovation in enterprise, building human capital and maximising the return on R&D investment for economic and social progress. Over the past number of years Ireland has built up a strong science base which has yielded results in terms of economic and societal impact. In Budget 2016 the Government is building on this success by prioritising the funding available for research, development and innovation. It also aims to maximise the impact of this investment on jobs and on the economy. A new science and innovation strategy under development will provide the roadmap for the next phase of Government investment”.
For more information contact
Department of Jobs, Enterprise and Innovation Press Office, 631 2200 or firstname.lastname@example.org
NOTES FOR EDITORS
Tax treatment of the self-employed - Earned Income Tax Credit to the value of €550., available to those with earned income who do not have access to the PAYE credit.
Capital Gains Tax - A reduced capital gains tax rate of 20 per cent will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in chargeable gains. The relief will represent a simplified and upfront benefit for individuals who sell their business.
Three-year tax relief for start-ups – relief extended for a further three years to end-2018.
Employment and Investment Incentive – scheme to make more investment finance available for businesses – thresholds increased - the amount of finance that can be raised by a company is doubled to €5 million annually subject to a lifetime maximum of €15 million, up from €10 million.
International Tax Strategy - we will provide in the Finance Bill for the introduction of country-by-country reporting, in line with the OECD recommendations
Knowledge Development Box –
- In Budget 2015, we committed to introducing a best in class knowledge development Box and I am pleased that Budget 2016 has delivered on that commitment.
- We are the first county to respond directly to the final reports of the OECD BEPS (Base Erosion and Profit Shifting) review process published last week on 5 October. Ireland was an active participant and contributed fully to the BEPS Review process.
- Innovation is at the heart of our growth model for the future and from the 1 January 2016 we will have a Knowledge Development Box in place.
- The Minister for Finance has announced a competitive rate of 6.25 percent which coupled with Ireland’s competitive Corporation Tax rate and regime, our R&D tax Credit regime and other supports for intellectual property management, together with our investments in research and talent, should ensure that Ireland is among the leading innovation hubs for the future.
- We recognise that R&D is risky and does not always result new products and services; where R&D does result in new products and services and if that production and sales activity linked to the R&D is managed from Ireland, enterprises will be eligible to be part of the Irish KDB.
- So for example, where a company has a genuine new idea that is patentable or can be copyrighted and there is R&D being undertaken in Ireland and the income from sales or services or licences on international markets can be traced back to the R&D in Ireland, then that company should be eligible under the KDB. Revenue will bring forward guidelines in due course.
Small and Medium Enterprises to Benefit in Particular
The KDB will also encourage indigenous R&D and foster innovation among start-ups, small and medium sized businesses, supporting further job creation across the economy in this important sector.
The Finance Bill will bring forward details of eligibility criteria and including measures specific to companies with lower levels of income arising from IP in line with OECD guidelines.
NATIONAL MINIMUM WAGE
Today’s decision on the National Minimum Wage follows the recommendations of the Low Pay Commission last July, which concluded that that the National Minimum Wage should rise by 5.8% to €9.15 per hour.
The current rate of the minimum wage is €8.65. The minimum wage was last increased in 2011 by €1 to €8.65, following a cut of a similar amount imposed by the previous Government earlier in 2011.
In a comprehensive report submitted to Minister for Business and Employment, Ged Nash TD, the Low Pay Commission set out a range of data it has considered in recommending the 50 cent increase. Commissioners also sought submissions from interested parties and consulted directly with workers on the minimum wage and employers in relevant economic sectors.
In making its recommendation, the Low Pay Commission sets out a range of considerations it has taken into account, including:
- The available evidence suggests that moderate increases in the minimum wage will not lead to significant loss of jobs
- The Irish economy is recovering although it still faces risks particularly in the external environment
- The number of people in employment is increasing
- Unemployment remains high but has declined particularly in the last year
- Competitiveness has improved, partly due to exchange rate movements and it is important that this trend is maintained
- While inflation has been relatively low, the minimum wage has effectively remained at its current level for the past 8 years
- It is of critical importance to enterprise development that the design of both the tax and PRSI systems creates the right conditions for job creation, including the incentives (from both employer and employee perspectives) for employees to work additional hours and to increase pay where appropriate.
Statistics for those on the NMW
REGIONAL JOBS PLANS
The Department’s capital allocation in 2016 will support the continued roll-out of the 8 regional jobs plans, aimed at supporting an increase of 10-15% in employment in each of the 8 regions. Among the measures that will be delivered in 2016 through the roll-out of the €250million in funding provided for these plans include:
- IDA capital works including completion of advance facilities in Sligo, Tralee and Castlebar, and start of works on advance facilities in Galway, Dundalk and Limerick
- Rollout of €50million Enterprise Ireland competitive funds for job-supporting projects in each region
- Three plans (Midlands, South West and South East) have been published, two more (Mid West and West) will be launched in the coming weeks with the remaining three (Border, Mid East, Dublin) well advanced and on schedule for launch shortly
The 2016 capital allocation will allow IDA Ireland to deliver
- Job approvals for 2016 with over 15,000 gross new jobs
- New Investments – 175 with 80 new named companies and 61 expansions and 34 R&D investments
- So far this year, Advance Technology Buildings have been completed in both Waterford and Athlone and the construction of buildings in Sligo, Castlebar and Tralee is at an advanced stage of procurement. The 2016 Capital allocation will enable IDA to continue this programme of advance builds with projects in Galway, Dundalk and Limerick. The allocation for next year will also allow for vital investment in IDA’s portfolio of Business Parks around the country.
- The IDA’s 2016 capital budget will provide for the Winning Abroad programme, with 35 additional resources on the ground in-market promoting Ireland and winning investment, and also the further development of manufacturing-focused LEAN programme.
Enterprise Ireland will continue to target significant results in 2016, building on the impressive job creation and export achievement of its clients in 2015, by aiming to support over 13,000 new jobs and increase client exports to some €22bn in line with the Enterprise Ireland Strategy 2014-2016
Enterprise Ireland’s capital allocation will enable it to continue to deliver significant activity in 2016 including:
- the continued roll out of the Seed and Venture Capital Scheme & Development Capital Scheme to ensure that sufficient risk and growth capital funding is available for emerging Start-Up and scaling companies
- building on the achievement of competitive feasibility funds over recent years by launching 4 targeted funds during the year in 2016
- continuing to provide management development programmes targeting the participation of over 1,000 individuals on short and long management development courses as a key part of its strategy to drive scale and ambition in Irish exporting.
- developing an International Events Programme to connect companies with new customers in international markets leading to increased exports and job creation in Ireland.
- support 100 Innovative High Potential start Up Companies in 2016 with an associated 2,000 job commitments in 2 years’ time from HPSU companies. These approvals will be across a range of sectors including life sciences, ICT and food. These companies are the source of potential star performers of the future and each one will create at least €1m in sales
- issue six Competitive Start Fund calls with a target of financially supporting 85 innovative entrepreneurs across a number of sectors
- fund over 100 in-company R&D projects for client companies that are valued in excess €100,000
- support companies and academics to win over €150 million in research funding from the EU’s Horizon 2020 programme
- continue to drive the innovation performance of indigenous industry and the commercialisation of state funded research
- support companies in Ireland to target undertaking of important collaborative projects with Irish third level institutions, through the Innovation Partnership Programme
- support the development of 130 new entrepreneurs under ‘New Frontiers’ -Enterprise Ireland’s entrepreneurial training programme supporting early stage entrepreneurs across the country
- continue the development of Knowledge Transfer Ireland and the wider national Technology Transfer system with a view to creation of around 30 new spinout companies and delivering over 120 new pieces of commercially relevant technology for industry
- support the Innovation Voucher programme, which will enable almost 500 small businesses to purchase innovation expertise from a third level institute
- further support the 13 existing Technology Centres, which are research centres of scale which deliver research solutions for sectors of companies.
- over 100 companies approved for LEAN
LOCAL ENTERPRISE OFFICES
- Capital allocation to LEOs will support the creation of 4,000 additional jobs in 2016
- Start-up businesses create two thirds of all new jobs in Ireland, and they also offer huge potential to support jobs growth in every town and village in the country. Through the offices of the LEOs all Government supports for start-ups are available in one easily accessible place. As well as direct financial support LEOs deliver other supports such as advice, training and mentoring. In addition to core LEO supports the LEOs are the conduit for the delivery of trading online vouchers scheme, which have helped so many start-ups, as well facilitating businesses to access assistance from MicroFinance Ireland.
- In addition through initiatives such as the Student Enterprise Awards the LEOs will continue to develop links between the education system and the real economy, so that school leavers are equipped with the skills, expertise and practical knowledge of business operations that will enable them to pursue entrepreneurship as a career option. The cumulative impact of initiatives such as the Student Enterprise Awards run so successfully by the LEOs cannot be underestimated.
SCIENCE FOUNDATION IRELAND
The funding allocation in 2016 will enable SFI to:
- continue to fund the 12 SFI Research Centres, which represent an investment of €355m from the government and €190m from 200+ industry partners. These new world-leading, large scale Research Centres will focus on strategic areas of economic importance to Ireland, involve significant industry partnerships (with both MNCs and SMEs) and leverage cash and in-kind funding from industry.
- train circa 3000 researchers for future employment in key positions in Industry to help drive areas of strategic national importance.
- continue to develop its industry-facing programmes such as the SFI Strategic Partnership programme, the SFI Industry Fellowship programme and the SFI Spokes programme. In 2016, SFI will support up to 10 new Spokes awards, 8 new Strategic partnerships and 50 Industry Fellowships. These programmes engage with industry in collaborative research projects and leverage industry funding, both cash and in-kind.
- continue to support the delivery of Government’s ambitious targets under the EU Horizon 2020 (H2020). Activity across the research community to date has been very encouraging to date, with the level of funding won under particular programmes surpassing that achieved under previous EU schemes. SFI has contributed to this by setting ambitious targets for each of the SFI Research Centres and catalysing activity through its Investigators programme. In addition SFI has funded an individual EU programme manager in each of the Centres to stimulate activity.
- undertake an integrated recruitment campaign in partnership with the Irish Universities under the SFI Research Professorship programme to attract world-class researchers with exceptional reputations to Ireland to assume leadership positions in areas of key national importance. There will be a particular focus on experts in the field of advanced manufacturing along with established areas such as climate change, smart cities, smart ageing etc. SFI will continue to support the 2 appointments made under this programme in the areas of ‘internet-of-things” and crystallisation related to pharmaceutical manufacturing.
TYNDALL NATIONAL INSTITUTE
The 2016 capital investment will enable the Tyndall National Institute to:
- continue to drive development of economic impact and job creation through the transfer of advanced technologies for exploitation by Irish industry.
- provide ICT hardware solutions creating opportunities in key industry sectors such as Microelectronics and Medical Devices through over 200 company interactions.
- support FDI development opportunities in conjunction with IDA, contributing to significant job creation targets.
- support at least 2 new start-up companies using Tyndall technology and know-how.
- provide access to its national research infrastructure for use by industry and researchers throughout Ireland.
EUROPEAN SPACE AGENCY
Ireland's participation in ESA, co-ordinated by Enterprise Ireland, will continue to support a growing number of Irish companies in the rapidly expanding European and Global space markets. Investment in space programmes and associated support to Irish industry yields economic dividends several times greater than the initial State investment.
Ireland’s investment in ESA Space industry and research programmes is projected to deliver:
- a doubling of sales in ESA participating companies from €43m in 2013 to over €80m by end 2016
- a rise in total employment in ESA participating companies in the space industry and research sector from 1,600 in 2013 to over 2,300 by end 2016
- an expansion in the number of companies actively engaged with ESA from 50 to over 75 by 2020 with an average of 5 new entrant companies per year
- increased targeting of EI supports for new company start-ups through, for example, the establishment of the ESA Business Incubator Centre in partnership with 3rd level institutions.