Dáil Éireann Debate, Tuesday - 26 May 2026
141. Deputy James O'Connor asked the Tánaiste and Minister for Finance if he is considering new taxation measures to strengthen Ireland's competitiveness to support the growth of the indigenous sector and encourage retail investment; and if he will make a statement on the matter. [39878/26]
Amharc ar fhreagraWill the Government consider any new measures in the forthcoming budget to support the growth of the indigenous sectors in Ireland and to encourage more retail investment? I do not need to tell the Tánaiste the importance of small and medium-sized companies in this country. When we see the enormous exposure Ireland has regarding our corporation tax receipts, although it is a huge benefit to the economy, there is also a risk if we ignore Irish businesses and do not do enough to support them, foster them and help more businesses to grow, expand and be founded in our country. Does the Tánaiste have anything to say?
I thank the Deputy for this important question. A number of tax incentives that are in place are intended to encourage investment in indigenous businesses, particularly in our small and medium enterprises. These measures include the employment investment incentive, the research and development tax credit, the start-up capital investment and the relief for investment in innovative enterprises, also known as angel investor relief. The research and development tax credit is another tax relief that is now making a significant contribution to Ireland's competitiveness.
Ireland still does not have a sufficiently diversified savings and investment culture. This is a real issue in our country. Deposit accounts are appropriate for many people and for many needs but as inflation can erode their value over time, they should not be the only practical option. Investment in capital markets by retail investors can offer another path to long-term financial well-being while also supporting growth and competitiveness in the wider economy, as has been identified in the EU’s focus on the savings and investment union, SIU. I acknowledge the work the Minister of State, Deputy Troy, is doing with me in this key area.
An important aspect of the SIU is the European Commission’s recommendation on increasing the availability of savings and investment accounts in member states. At the recent savings and investment forum, I announced our intention to introduce a legislative framework for an investment account in Ireland in the next budget. We want to make investing simpler, clearer and more accessible for ordinary people. In designing the model that best fits the Irish economy and the needs of Irish households, the views of relevant experts are being considered and we are learning from international best practice. That is not about picking up something from another country and saying that we will take exactly that. We will learn from best practice and find what is the best model for our country too. Many countries have implemented similar schemes and they have reported that investors tend to have a home bias in their investment choices.
Budget 2026 included a commitment to publish a roadmap for the taxation of retail investment in 2026. The development of the investment account is a key part of that roadmap, as is consideration of the existing taxation regimes for investment. I expect to be in a position with the Minister of State, Deputy Troy, to publish that roadmap this summer.
I thank the Tánaiste and appreciate his response. Yesterday, we saw some very important information come from the International Monetary Fund that effectively warned Ireland about a level of exposure our economy has when it comes to bloated expenditure and wastage of public money and the risks in our economy, such as the advances in artificial intelligence. They are things the Government cannot afford to ignore. I fear that we are not quite at 2008 levels yet, but we are back in 2005, 2006 and 2007, when the Celtic tiger reached its peak and it all came to a miserable end. I wanted to say that on the record of this House and I hope I am proved wrong in four or five years' time. We need to ensure that indigenous businesses, our SMEs and our entrepreneurs are supported, that our economy gives them the best possible chance of success and that we are able to derisk Ireland from what the IMF has stated is a particular concern.
We know that multinational companies are moving five times faster than the SME sector when it comes to the application of artificial intelligence. We have a bloated number of employees in Ireland working in multinationals. The risk is clear and obvious. It is a serious risk to the State.
I thank the Deputy. He said he wanted to put something on the record of the Dáil so let me do that as well. While the Deputy is right that we should always be cautious about our economy and never take economic stability or growth for granted - sometimes that seems to be the case in our discourse - I contend that the country has structurally learned a lot of lessons in terms of plans and actions from the crash. That ranges from the fiscal rules we have in place to our level of indebtedness, both at a national level but also at a business level, being a lot lower too.
The Deputy's point about the indigenous sector is right. It is still a statement of fact that the greatest number of people in employment in Ireland are in Irish-owned SMEs. This is a sector we have to really support. The research and development tax credit is now being used by more and more SMEs, but making this as simple as possible for smaller companies to access is important too. On AI, the approach of the Government and country has to be to maximise the opportunities and minimise the challenges. I know both Ministers, Deputy Burke and Deputy Lawless, are working on how we can address the skills deficit that interacts with those two Departments. The Industrial Development Agency, IDA, and Enterprise Ireland, EI, are supporting companies as well. The Minister, Deputy Lawless, is looking at how we can train more people in these areas. There are also huge opportunities for the Irish economy, for both indigenous and FDI-supported companies, in terms of productivity if we can get AI right.
I appreciate the Tánaiste's response. Undoubtedly, the agencies he mentioned, including the IDA and Enterprise Ireland, have done great work. As Chairman of the Oireachtas Joint Committee on Enterprise, Tourism and Employment, I commend them on the huge body of work they have done over many decades. Beyond politics and beyond what happens in this House, they are working diligently on behalf of the State across the world and that has to be commended. We have to come to terms with the fact that AI will change the world. It will change how people work. It will reduce the number of people in our workforce and we know that. We see it happening. We saw it with Meta recently and other companies that are starting to downsize their workforce.
Informally, some governments are already talking about a future, amazing to say it, without the income from PAYE workers. That is the level of change. If we look at the pioneering companies in respect of this, such as Anthropic and others, they have discussed the possibility that from 40% to 60% of the current workforce in the United States of America could be finding themselves in some way redundant over the next ten to 15 years. We need to take this seriously and look at the key risks to the economy in Ireland.
That is right; we need to take it deadly seriously. I do not mean this about Deputy O'Connor but about me. I always think that speaking with great authority on something that is fast evolving is challenging because we are all learning about this in real time. That is not an excuse or a reason not to take it extremely seriously because the countries that work out how best to respond to this are the countries that will do the best. We have only to look at the Future Forty report, which my Department published.
It refers to the huge demographic challenges this country is going to face. One of the great ones is that everyone is going to live to be much older, on average, and the population is going to age. The question of whether we can transform healthcare through the use of AI, for example, points to one area where I believe we could see real productivity gains. At the moment, all of the conversation seems to be about productivity gains in the private sector and just being aware of the risk in the public sector. We have got to do a bit better than that.
The other point is that, up until now, every technological revolution has resulted in more jobs at the end of it than at the start. That merits close monitoring. What we do know is that training and upskilling comprise an immediate issue, and we have to take that very seriously.
