Renewed calls for tax relief for PCs and broadband

13 Feb 2006

Senior figures in Ireland’s ICT industry have renewed calls for the Government to provide incentives such as tax credits to encourage citizens and employees of local companies to buy PCs and get broadband in order to bridge what they fear could be an impending digital divide between the tech haves and the tech have-nots.

Responding to questions posed by, senior executives from Dell, HP, Microsoft, Google and Eircom said the Irish Government would need to incentivise PC ownership and reward the deployment of broadband if Ireland was to realise the full potential of the knowledge economy.

According to the Commission for Communications Regulation’s (ComReg) most recent Trends Report for the third quarter of 2005, home internet penetration in Ireland was static at 37pc, having not increased in two years. It is understood PC penetration in Ireland currently stands at around 42pc. Eurostat has claimed Ireland has a broadband penetration of only 1.7pc compared with the European average of 12pc.

John O’Herlihy, European operations director of search giant Google, which employs 800 people in Dublin, said: “If we want to realise the full potential of the ‘knowledge economy’, Ireland needs to incentivise PC ownership, perhaps through a tax concession. Because of the size of the country there could be a partnership approach encouraging employees to purchase a PC for the home environment with fiscal support or incentivisation from the Government and their employer. It will ultimately benefit not only the economy but society as a whole.”

“Ireland’s continuing economic success is dependent on increasing our overall productivity,” said Joe Macri, country manager of Microsoft Ireland. “Technology in general – and PC access and broadband penetration specifically – have a critical role to play in helping individuals and businesses increase overall productivity gains. Ireland needs to address these fundamentals if it is to be in a position to maintain its competitiveness in the future.”

David McRedmond, commercial director of Eircom, pointed to measures introduced by other European governments to stimulate PC and broadband penetration, including tax relief. “The UK’s ‘Salary Sacrifice’ campaign allowed the cost of a PC to be deducted from employee’s gross salary, thereby passing the tax savings on to the employee. It resulted in PC penetration increasing from 33pc to 62pc between 1998 and 2004. Sweden, which has the highest PC penetration in Europe, operated a similar scheme called PC Prive. More than 550,000 Swedes purchased computers and penetration increased to 80pc. In addition to tax breaks, training, equipment provision and PC promotion have been used to great effect in European countries. In Denmark, 650,000 PCs were added in 18 months as the government promoted teleworking.”

Dell’s Tim McCarthy said that the need to reward citizens for deploying technology has been brought to the Government’s attention by the industry. “As an industry we have long campaigned for the introduction of fiscal measures which would help to incentivise employees to purchase PCs for home use through their place of work. Initiatives such as these have been used effectively in Sweden for many years and the results can be seen in that country’s penetration rates.”

Martin Murphy of HP agrees: “In order to drive PC penetration we need to create demand by putting incentives in place. The cost of PCs is continually being driven downwards, but that alone is not enough. I would advocate that incentives be put in place to help achieve the 80pc+ penetration rates we can aspire to. For example, incentives could take the form of tax credits on PC purchases for households or employers. Such a scheme is already operating successfully in the UK.”

Damien Mulley of consumer lobby group Ireland Offline said that the low PC and broadband penetration levels are due to cost and belie a natural affinity Irish people have with technology. “It isn’t like Irish people are luddites or are afraid of technology. In Ireland X-Box and PlayStation ownership per head of population is one of the highest in the world. We love our mobiles and are addicted to texting. We’d love our computers too and use them a lot more if we could make full use of them but we can’t because of connectivity.

“The Government needs to make internet access affordable and available so that people can get value for money out of their PCs. At this stage too the Government should consider creating incentives for purchasing PCs but unless connectivity is also resolved they will only be used to gather dust,” Mulley concluded.

By John Kennedy