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Redmond made his comments after a Government published survey (see highlights below) of companies who have used BES found that over 60% of these companies employed less than 15 staff and in two thirds of cases, their annual sales were less than €1million. 40% said it encouraged them to increase their workforce. Last month, the Irish Congress of Trade Unions (ICTU) lodged a formal complaint with the European Commission about the Budget 2007 provisions to increase investment in Irish companies.. ICTU says that the extension of the Business Expansion Schemes in the Budget will benefit only high earners who do not pay tax on the money they put into the schemes. Commenting, Redmond said: “This review shows that taxation is at the apex of the Irish economy, especially for the small business sector. It presents compelling evidence that innovative tax policy like BES helps companies grow, creates jobs, leads to improved services, supports Irish exports and generates revenue for the exchequer.”
Redmond drew attention to the influential role BES is playing in incentivising new businesses, products and services. 52% of respondents said BES made them more ambitious to grow with 47% attributing BES finance as a key factor in launching new or improved products and services. “These findings demonstrate that a proper functioning BES is often a key factor in getting new ventures up and running and new products and services onto the market”, he said.
Redmond highlighted that the risk taken by investors in using BES has resulted in real economic returns.
He said: “What is often forgotten when considering BES is the risk attached for the investor. Investors using BES do so at their own risk. If their investment fails they are at a loss. But if the investment succeeds, both the investor and the State gain – the investor in the form of a return, the State through increased corporation, income and VAT tax receipts.”
Redmond said that the future of BES should continue to be shaped by economic and social needs. He urged Minister Cowen to build on improvements announced in the Budget by expanding BES to key national needs like renewable energy, infrastructure and broadband in the forthcoming Finance Bill.
“Tax policy is a proven tool in meeting key economic and social needs. With this in mind, ITI is calling on the Minister to expand BES to positive effect in key need activities like renewable energy, infrastructure and broadband. Investment in these activities is now imperative if we are to meet the stated objective of achieving a high value economy”, he concluded.
BES Review The Minister for Finance, Mr Brian Cowen, T.D., published today the preliminary results of the Survey of BES companies conducted by the Department prior to the Budget. The full survey results will be published in due course. Questionnaires were sent to nearly 1,400 companies (1,391) who had used the BES in the past. Responses were received from 491 or 35% of these. The range of firms responding included businesses from all parts of the country. Of those who responded 58% classed themselves as manufacturing, 22% as international services, 12% as tourism projects and 8% as other. Over 70% of companies were new, being set up in the past ten years. One third of all firms were start-ups or in the development phase. The bulk of firms, over 60%, employed less than 15 staff and in two thirds of cases their annual sales were less than €1 million. Export sales represented 56% of output for all firms surveyed. In terms of actual money raised through the BES, three quarters of the firms raised less than half a million Euro. Many of the firms used the BES funds to launch new or improved services, expand their workforce and grow the business. They also used the funds to increase capital expenditure and invest more in Research & Development. The majority of respondents (62%) also indicated a wish to raise more BES funding in the period ahead, most of this being for less than €1 million.
Minister Cowen welcomed the preliminary results of the survey. He stated that: “The survey indicates that the current BES scheme has been good for manufacturing, good for jobs and good for investment in small firms throughout the country. I am confident that the expansion of the scheme I announced in the Budget will further support our enterprise culture. This is not risk-free investment: a return on the investment is contingent on the company making a go of it. We vitally need such schemes if we are to create more jobs in small manufacturing firms throughout the country”. The Minister said that these points would be made strongly to the European Commission in seeking approval under State aid rules to continue the scheme as proposed in the Budget. The BES review, carried out by the Department of Finance in conjunction with the Department of Enterprise, Trade & Employment and the Revenue Commissioners found that: - Those companies surveyed came from the following sectors: o 58% classed themselves as manufacturing, o 22% as international services, o 12% as tourism projects and o 8% as other. - Over 70% of companies were new, being set up in the past ten years. - One third of all firms were start-ups or in the development phase. - The bulk of firms, over 60%, employed less than 15 staff and in two thirds of cases their annual sales were less than €1 million. - Export sales represented 56% of output for all firms surveyed. - 34% availed of BES for R&D investment - 62% see a requirement for BES fundraising over the next three years with 70% indicating the total amount of equity required being less than €1million © Copyright 2007 by Finfacts.com |
