Small Business PRSI Credit Could Create 80,000 Jobs

Micro companies have the capacity to create more than 80,000 new jobs in Ireland if the government reduced the initial cost to hire new staff, according to Dublin Chamber of Commerce.

In its pre-budget submission, Dublin Chamber has called on the Government to offer an employer’s PRSI tax credit for the first three years when a micro business hires a new member of staff.

Micro firms, those with between 2 and 9 employees, are currently are required to pay 10.75% tax on each staff member they employ. The Chamber’s recommendation would see this tax waived for three years, to make it more attractive for firms to create new jobs.

According to Dublin Chamber CEO Gina Quin: “Employer’s PRSI is currently the same regardless of the size of the business. Small growing businesses are taking a chance with each new person that they take on. The Government’s current approach to employer’s PRSI often makes it just too big a risk to take. Removing the PRSI burden will get more people working in small businesses. If each of the 80,000 micro businesses in Ireland hire just one extra person it would bring the unemployment rate down by a third.”

The Chamber said it welcomes the Government’s reported greater focus on encouraging entrepreneurship in Budget 2016. However, their submission says that more must be done to support entrepreneurs and owners through all stages of the business cycle, including through periods of growth and scaling.

To achieve this, and to bring Ireland’s tax set-up in line with what is on offer to entrepreneurs in the UK, the Chamber’s submission also includes the following recommendations:

• Introduce an entrepreneur CGT relief (10% rate) similar to the UK Entrepreneurs’ Relief
• To compete with the UK’s EIS and SEIS regimes, replace EII second tranche relief with an exemption from CGT on sales of shares acquired under the EII system.

Ms Quin added: “Dublin Chamber has noted an increase in the number of businesses seeking to relocate from Ireland to the UK. Over the past five years, the UK has rolled out the red carpet for foreign entrepreneurs by introducing a swathe of tax improvements and incentives for young companies. The Government here must follow suit and bring our own tax environment into line with that available to UK-based companies. Unless action is taken, more Irish entrepreneurs will be enticed to Northern Ireland or mainland UK by the relatively lower cost base.”