Monday, 22 November 2004
The Irish Engineering Enterprises Federation (IEEF), the IBEC body responsible for the engineering sector, has launched its Budget Submission 2005 today (Monday), calling on Government to take action to prevent further damaging increases to business costs and help promote growth in the sector.
Local government financing
Increasing business costs over the past number of years have put the Irish engineering sector under severe pressure and damaged its competitiveness. Local government charges have become a very significant cost item to the industry, with the burden of financing local government being largely borne by business. To address this, the IEEF is calling on Government to introduce a cap on local government charge increases and to widen the revenue base for local authorities.
R&D Tax Credit
R&D will be crucial to growth in the engineering sector. While the R&D tax credit, announced in Budget 2004 is a welcome tax initiative, companies in the sector feel that, in its scope and its scale, it does not do enough to promote R&D in engineering. The IEEF is calling for a review of the R&D tax credit to be undertaken and is seeking a role in the consultation process in advance of the 2006 Budget.
Write-off period for capital equipment
Throughout the engineering sector, capital equipment has a shorter life than that currently allowed by the Revenue Commissioners for depreciation purposes.
The 8-year mandatory write-off period for capital allowances on plant and equipment should be reduced to fall into line with accounting depreciation. Condensing the write-off period will better reflect the effects of depreciation on capital equipment and consequently act as an incentive for increased capital investment.
Corporation Tax
The IEEF is firmly in favour of the retention of the 12.5% corporation tax rate. The 12.5% rate is absolutely critical to retaining the current level of output, investment and employment in the Irish engineering sector.
'There is a real potential for growth in the sector,' said IEEF Director Paul Kelly 'however, the Government must address the barriers, particularly the damaging burden of business costs, which undermine the competitiveness of the engineering sector and the economy in general.'