In a budget that will see taxes rise and shock cuts such as the early childcare allowance, Finance Minister Brian Lenihan TD announced measures that will stimulate the local economy and continue to encourage foreign direct investment, including the retention of 12.5pc corporate tax.
The corporate tax of 12.5pc is pivotal to the attraction of foreign investors such as Intel, IBM, Microsoft, Yahoo!, Google and eBay, and will no doubt be welcomed by the business community.
Other measures aimed at getting people back to work after a period that saw 130,000 workers join the live register include an Enterprise Stabilisation Fund of €100m over two years.
Lenihan said the broad cost of each 1,000 people who lost their jobs is now estimated at about €21m.
In conjunction with reforms of the banking sector, the new Enterprise Stabilisation Fund will provide direct financial support to eligible internationally trading enterprises.
The Government will also implement measures to support the “smart economy” through incentives, with an R&D target of 2.5pc of GNP by 2013.
“We have already trebled our economy-wide R&D spend over the last decade. It is now around €2.5bn, of which some two thirds comes from the enterprise sector. It is not just a matter of saving jobs where we can, but of reorienting the economy to produce the export-led growth we must achieve,” Minister Lenihan said.
Among the measures are steps to support those who have lost their jobs through retraining and further education. A Back to Work Enterprise Allowance Scheme will facilitate some 1,400 additional claims.
Minister Lenihan also said he also wants to encourage further education through earlier eligibility for the Back to Education Allowance.
A graduate placement programme could cater for 2,000 people. A plan to expand activation opportunities could support 14,000 people.
A scheme to support redundant apprentices to receive additional training in the education sector will support 700 people. And a move to enable participation in further and higher education could aid some 6,000 people. The Minister also said he wants to initiate pilot training schemes for workers on a three-day week.
The full cost of providing close to 25,000 additional places will be in the order of €128m.
In terms of R&D, Minister Lenihan said he plans to introduce a scheme of tax relief of the acquisition of intangible assets, including intellectual property, to support the smart economy.
Details are to be worked out by the Department of Finance in conjunction with the Revenue Commissioners and will be published in legislation. “This measure will help to attract highquality employment to this economy,” the Minister said.
Fundamental in all these measures, Minister Lenihan said, was the restoration of Ireland’s reputation.
“As a small, open economy, our reputation abroad matters in terms of our ability to attract foreign investment. Recent banking scandals have sullied our good name and may have prompted some investors to think twice about investing here. Measures presented in this budget send a strong message around the world that we are determined to restore our reputation.
“The actions I outlined to repair banks’ balance sheets and the proposed reforms of our regulatory and supervisory regime are aimed at rebuilding confidence in our financial system.
“The resolute actions we are taking to reduce the budget deficit and to boost competitiveness by driving down costs, prices and wages are needed to restore the confidence of prospective investors and foreign lenders,” Minister Lenihan said.
By John Kennedy
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