Joan Mulvihill’s response to Budget 2016.
40 Pre-Budget Submissions, one meeting. The ROI of time spent lobbying government is questionable when you are left asking yourself if they didn’t understand the problem much less the proposed solution.
The budget comes around like Christmas every year and this was like a not-so-secret Santa Christmas. Everyone knew what they were getting and what they were getting was socks. It was a great budget for those who needed socks. It was a pretty okay budget for those who didn’t need socks but believe that you can never have too many pairs. But for the rest it was disappointing. The innovating entrepreneurs got socks but that were so ill-fitting we wonder if they’d bother to check for size. Did they really just give us the FDI pattern socks in the traditional entrepreneur’s size with a stretchy fabric in the hope we wouldn’t notice?
I deliberately use the term ‘innovating entrepreneurs’ to reflect the parlance of the Department of Finance. In their own recognition of the difference between traditional business entrepreneurs and those developing disruptive, innovative businesses and business models we’d hoped they’d understood our different needs.
Our socks are just too small! A reduction in CGT from 33% to 20% falls short on two counts. Firstly, it only applies to a maximum of €1million over a lifetime and secondly it’s still nowhere near the 10% in the UK.
Our socks have holes in them! The government’s failure to address the shortcomings of the longwinded and overly complex EIIS scheme makes us less attractive as a place to start a business. The government have not addressed the very specific request for support in access to early stage investment. Budget 2016 allows you to raise €5million in a year instead of €2.5million. Big deal! The problem is the Small Deal! For early stage funding they could have provided better income relief for people willing to invest small amounts and furthermore they should have simplified the process. The uptake of the scheme in its current form is pitifully low. This budget will not change that. This hole in our socks is going to lead to leakage of more and more start-ups to set up in the UK where they can access the finance they need.
Our socks keep falling down! Innovating entrepreneurs need people to work for them. They need employees who are willing to forgo better paid jobs in FDI companies, who are willing to risk their own financial security to work in a start-up and with that risk should come some reward. Where are their share option schemes that recognise employee’s roles in supporting an innovative entrepreneurial economy? Certainly nowhere in Budget 2016. This government talks the talk on a global war for talent but when it comes to walking the walk they should try these socks for size and tell me that they’d do it!
I’ve run out of sock analogies! At a stretch I’d say that if the Emperor’s New Clothes included a pair of socks they would be presented to him in a Knowledge Box. That is to say, it’s hard to tell what’s real and what’s not. The Knowledge Box will offer the opportunity to further reduce your corporation tax from a generous 12.5% to 6.25% for profits directly derived from ‘qualifying R&D’ carried out in this jurisdiction. It’s yet unclear as to what is going to qualify as ‘qualifying R&D’. And until they sort out the R&D tax credits timing issues it will all be too little too late for the start-up.
This is painful for me to write. I had such high hopes. We wrote our list and posted it to the North Pole, Kildare Street back in July. Ministers have come out for every Web Summit sleigh ride, Start-Up Gathering grotto and Awards night turkey dinner. But behind their jolly smiles and ho ho hos they were just the fake Santa’s you see on every street and at every party. Let’s hope we have enough spirit left to try again next year. “I do believe, I do believe”….