The Family Business Network has today called for a reduction in Capital Gains Tax from 33% to 20% to spur investment in indigenous companies in its Budget 2021 submission.
In its submission to the Department of Finance, the Family Business Network also recommended the extension of the Commercial Rates waiver until the end of 2021 and a review of the current Commercial Rates regime to take account of the “unique challenges” facing the retail sector.
An immediate cut in the VAT rate for the hospitality and tourism sector to 5% is now urgently required to help support the sector through the difficult winter months, it added.
Family businesses also urged Government to update the tax system to remove the obstacles faced in family business succession planning and transition.
This includes abolishing the 90% cap to provide full relief from Capital Acquisitions Tax (CAT) under Business Relief.
John McGrane, Executive Director of the Family Business Network, said that Budget 2021 takes place in the middle of the greatest challenges facing Ireland in decades.
“Second only to saving lives, saving jobs should be the number one priority in the upcoming budget,” Mr McGrane said.
Noting that family firms employ more than three times as many workers as foreign-owned firms and the State combined, he said they can become the most effective engines for economic growth – but only if they are enabled to be.
Mr McGrane said that now is the time for Government to unleash the potential of Irish family businesses to secure a jobs-led recovery.
“Reducing the CGT rate to 20% is a win-win for the exchequer because it will release new investment by local employers and create new jobs. The last time Ireland reduced the rate of CGT, the State collected even more tax because of growth in activity,” he stated.
He also said that the Government must plan for the future.
“That’s why family-run businesses believe the National Economic Plan being unveiled with Budget 2021 should commit to establishing a National Recovery Forum to bring together employers, employees and Government, and collectively agree the best course for our economy over the next decade,” John McGrane stated.
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