County Kildare Chamber Pre Budget Submission 2023

Pre Budget Submission

Content 1.0 Introduction 2.0 Submission 2.1 Housing 2.2 Infrastructure 2.3 Economic Development and Employment 2.4 Energy and Climate Action 3.0 Conclusion

1.0 Introduction County Kildare Chamber is the business organisation in Kildare, proactively working to identify and progress developments that are facilitative of economic and sustainable growth. Representing an employer base of 400 businesses and over 38,000 employees across the county, County Kildare Chamber is the largest business organisation in the mid-east region of Ireland.

Given the significant breadth and depth of our membership, and our representation on various bodies at local and national level, County Kildare Chamber constitutes the representative voice for business in Kildare, a particularly important role given the current economic climate in the county and the state.

County Kildare Chamber is committed to improving the business environment and quality of life in Kildare and the wider region.

County Kildare Chamber welcomes the opportunity to comment on Budget 2023, which comes at a time of increased financial pressure and uncertainty for businesses and consumers.

As a business organisation, County Kildare Chamber believes that long term planning for the development of the country is essential in responding to the challenges presented by Covid 19, climate change, Brexit, and the current crisis in Europe.

We have set out below several broad areas for consideration within the confines of Budget 2023.

1) 2) 3) 4)

Housing Infrastructure Economic Development & Employment Energy & Climate Action

2.0 Submission As a county, Kildare has a number of significant attributes. Kildare, according to the last census has a population of 246,977, the fifth highest in the state, a growth of 11% over the past six years and is projected to grow again by up to 44,000 by 2031.

It has a substantial multinational economic cluster, a highly skilled workforce coupled with a high quality of life, our excellent infrastructure provision and connectivity (port, airport, and digital infrastructure) ensures we are well placed to achieve the goals set out in the National Planning Framework.

The Covid 19 pandemic has changed the way in which we all live, work and play. People are leaving bigger cities and choosing smaller cities and towns that offer a better work life balance.

People are now choosing hybrid forms of work, using hub spaces and flexible opportunities. With its proximity to Dublin, this offers new opportunities for Kildare to introduce innovative policies and capitalise on same.

2.1 Housing Key Asks: Increases in capital spending for affordable and social housing in urban aera identified by the NPF Procurement framework to be introduced for off-site manufacturing and modular housing projects Introduction of Zoned Land Tax at a rate of 7% Landlords (Corporate & Individuals) should be taxed equally at 25%, LPT should be allowed as a tax deduction against rental income. Where landlords retrofit a property, 100% capital allowances should be available in the year the work is completed.

Capital Gains Tax rate should be reduced from 33% to 20% to incentivise the release of residential property back into the market.

A recent survey of our membership identified housing availability as the number one issue affecting business competitiveness in Kildare over the past 12 months.[1] Many people made the decision to move home during the Covid 19 pandemic, due to the opportunities provided by remote and flexible working. This combined with the projected increases in our population has and will continue to put pressure on the housing stock available within Kildare.

Low levels of residential construction during the post 2008 recession in Ireland, has not kept pace with the growing levels of employment and population in the mid-eastern region. Given that current housing stock levels are inadequate, it is crucial that the level of housing supply target is correct for key growth areas such as Naas, Maynooth and the surrounds. Lack or inadequate levels of housing will lead to a potential decrease in FDI and indigenous prospective investors.

The Chamber believes there needs to be a substantial

increase in the capital spend for affordable and social housing in urban areas identified by the NPF. Under the Governments Housing for All scheme there are a number of relevant commitments, including a commitment to develop a Land Value Sharing system, and an increase in the provision of public homes which the Chamber welcomes. However, we believe the State, through the Local Authorities, approved housing bodies and the Land Development Agency must resume its central role in direct housing provision. To reduce pressure on the private market, social housing provision needs to move from acquisition and rental support to construction of purpose built social and affordable homes on a large scale.

A procurement framework should be introduced for off-site manufacturing and modular housing projects. These types of housing developments, utilising movable modular housing should also be considered as a temporary option for landbanks

that are unlikely to be developed in the immediate term.

County Kildare Chamber also believes the State should invest in the court and judicial system, to increase the speed of adjudications on planning decisions, which will in turn boost commencement dates on possible developments. The activation of vacant and derelict property is crucial to increasing the housing stock. County Kildare Chamber supports an increase in the Zoned Land Tax (ZLT) to encourage residential development. Within Kildare, the gap between planning permissions and actual construction continues to grow.

We believe any increase in this tax, should be put directly towards making these hoarded sites service ready for development using Urban Development Zones and that the rate should be at 7%, the current Vacant Site Levy rate with a 12-month lead in period for this change.

[1] Chamber Membership Pulse Survey (Q1 2022) by countykildarechamber - Issuu

We believe the Living City Initiative should be extended and established on a long-term basis out to 2030 and should be expanded to include long term vacant commercial properties built post 1915. Special Regeneration Areas should also be expanded to bring more potential housing stock under the LCI. Residential relief should be extended to all works on any building which qualifies for LCI. Statistics from the Department of Housing show there are 22,000 fewer landlords in the market today compared to 2016.[1] It appears that landlords, owning a small number of residential properties, no longer consider it to be economical to continue to rent out their properties.

Currently corporate landlords have more favourable tax treatment than individuals holding property given that corporates pay tax at 25% while individuals face tax rates of 52- 55%. This needs to be addressed, Local Property Tax should be allowed as a tax deduction against rental income.

Tax deductible expenses against rental income are very prescriptive in the legislation (Section 97 TCA 1997).[1] The wording of the legislation should be amended so that tax deductible rental expenses are more aligned with normal trading deductions i.e., expenses that are revenue in nature and incurred wholly and exclusively for the purposes of the landlord’s rental business.

Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be available in the year that the work is completed.

Rental losses in a particular year should be available for offset against the landlord’s other income (e.g., employment income).

This would incentivise loss making landlords to stay in the market (as their overall tax liability in a year of rental loss would decrease).

[2] The Irish Independent, 20,000 landlords have left rental market since 2016 - Independent.ie [3] Finance Act 2021, pdf (irishstatutebook.ie)

Equality in the tax treatment of corporate and individual landlords should also be looked at e.g., a flat 25% rate on rental (Case V) income for all landlords.

We believe the Rent a Room relief scheme should be enhanced. This should be done by increasing the minimum threshold for the relief from the current €16,000 per annum to match market rents and that individuals may earn up to the threshold tax free with only the excess rent being taxed.

We believe the Rent a Room relief scheme should be enhanced.

2.2 Infrastructure Key Asks: ·Financial support for the delivery of the electrification expansion of the Maynooth Dart+ West rail line.

Introduction of a flexi tax saver ticket for hybrid workers ·Accelerated rollout of fast charging points nationwide for EV’s, with particular focus on regional areas.

County Kildare Chamber believes sustainable transportation projects will serve as future economic, social and population growth enablers for Kildare.

The Chamber agrees with government for the need to reduce public reliance on private cars for travel, and the support for moves towards public transport, cycling and walking routes. This new approach is also essential in achieving the ‘10 minute settlement’ concept.

The concept is that all community facilities and services are accessible within a 10-minute walk or cycle from homes or are accessible by public transport services connecting people to larger scaled settlements.

The government must ensure these facilities are delivered in conjunction or in advance of any future residential or commercial development and are sufficient to cope with inevitable increased demand into the future.

Specifically, financial support for the delivery of the electrification expansion of the Maynooth Dart+ West rail line. Thus, encouraging reduced carbon footprint and reliance on private car travel, providing a healthier, more sustainable attitude towards transport. Our public transport system is now back to pre-pandemic levels [4], meaning it is at capacity at commuter times.

(4) The Irish Times, Public transport journeys hit highest levels since start of pandemic – The Irish Times

Additional and expanded public transport networks and active travel schemes, are the only tools in ensuring this concept is viable, and therefore need to be fully committed to within Budget 2023, with funding mechanisms future proofed. The Chamber also supports possible changes to the TaxSaver Commuter Ticket Scheme. It reduces the cost for workers using public transport, but it is not limited to Stateowned public transport.

Employers can make PRSI savings of up to 11.05% and employees can save between 31% and 52% of travel costs because of tax, PRSI and USC savings by using a TaxSaver ticket. However, with hybrid working now an option for many, the scheme needs to be adapted for workers who only commute to work for 1-3 days per week. At present, such workers only have an option of purchasing monthly or annual tickets, when they are only travelling to the office occasionally.

(5) Chamber Membership Pulse Survey (Q1 2022) by countykildarechamber - Issuu

We would support and recommend an introduction of a flexi tax saver ticket for hybrid workers, as an additional cost-of-living support measure.

When asked in our recent survey, businesses said public transport in Kildare was not adequate [5].

There is a growing frustration within our network at the consistent delays with timely delivery in transport and infrastructure projects.

We believe a streamlined planning regime for key infrastructure projects and that a move away from the Public Work’s standard form contract towards international best practice alternatives will help alleviate this uncertainty.

County Kildare Chamber also asks Budget 2023 look at Electric Vehicles, and particularly investment in the acceleration in the rollout of a national fast charging network, with a focus on regionals areas, whilst also providing for public transport in urban settings. With ongoing focus on increased inflation and the costs associated with same, including reduced consumer confidence, consideration should be given to reducing the VAT rate on EVs to bring the cost of these vehicles into a more competitive range with ICE vehicles.

2.3 Economic Development and Employment Key Asks: ·Increased investment in childcare services, and early education infrastructure.

Simplified work permit process Introduction of a skill tax credit, to encourage employers to invest in training for workers with lower qualifications.

USC and Income tax should be merged to simplify the personal tax system Revenue rules around a person’s place of work should be reviewed in light of increases in hybrid working arrangements ·Professional service companies should be given access to the EII and SURE tax relief schemes and to Start-up Company Relief.

As a key commuter county, with a large population, excellent infrastructure provision and connectivity to airports, rail, and port services, with a large number of multi-national and domestic companies employing thousands of our highly skilled workforce, Kildare represents a driving force in the national economy and preforms a key role in ensuring the continued international competitiveness of the region. To achieve this Budget 2023 must ensure the conditions are right for the creation of quality jobs in locations around the county.

Unemployment is now running below 5% nationally [6], which means the economy is running at close to full employment. County Kildare Chambers Q1 business survey found that close to 40% of our employers regarded availability of skills and talent to be the biggest issue facing Kildare’s competitiveness. The survey also saw over 50% of businesses say staff retention and skills shortages had been an issue in the past 12 months [7].

[6] RTE, Unemployment rate falls to 21-year low of 4.2% in July (rte.ie) [7] Chamber Membership Pulse Survey (Q1 2022) by countykildarechamber - Issuu

Recent studies published by the Central Bank have found labour supply is not keeping pace with demand in many sectors of the economy [8], which is putting pressure on many already squeezed businesses to produce more attractive wage packages when recruiting. This is also affecting Kildare and the mideastern region as an attractive location and undermining competitiveness.

Given the increasing demand on the labour force, we believe several measures could be used to alleviate pressure and encourage, particularly women, back into the workforce. Childcare costs in Ireland are among the highest in Europe.

Increasing investment in childcare services, and early education infrastructure are key. Facilitating the reopening of breakfast clubs and after school childcare, which will help working

[8] Central Bank, Quarterly Bulletin No.3 2022 (centralbank.ie)

parents and mitigate against reduced supply of childcare places that has arisen from Covid19. The introduction of a tax credit system would also likely encourage second earners in a household back to work and will become increasingly so the closer we get to full employment.

However, with Irelands Marginal Effective Tax Rate higher than many other European countries, this may need to be reviewed, for households with children who are also carrying a significant childcare cost burden.

Reforming and simplify the work permit process is also vital in developing and attracting talent to Ireland.

Rising inflation, costs and a housing crisis mean Ireland is no longer seen as the attractive location it was, we need to minimise barriers for non-EU citizens accessing our workforce.

Increasing regional skills for resources, both in staff and funding will also be important in tackling skills deficits in many parts of the country.

The Chamber believes a new skills tax credit should also be introduced encouraging employers to invest in training for their workers with no or low qualifications.

The Chamber fully supports access to the workforce for all and would like to see greater incentives for businesses to employ people with disabilities.

Introduce a third rate of income tax so that the full marginal rate would no longer be fully triggered when an individual earns a relatively low threshold, currently €36,800 which is below the average industrial wage. The Chamber also believes Income tax and USC should be merged to simplify the personal tax system.

An employee’s “normal place of work” is central to the tax treatment of travel and subsistence reimbursement to employees. Revenue’s view is that an employee’s home is not his / her normal place of work other than in exceptional circumstances and this brings complexity and uncertainty [9].

Rules to determine an employee’s normal place of work should be considered in light of the move to hybrid working arrangements (say based on where the employee carries out most duties of the employment, whether that is their home / employer’s premises etc.

Regarding employers, professional service companies and unincorporated businesses we suggest changes through the tax system.

Professional service companies should be given access to the EII and SURE tax relief schemes and to the valuable Start-up Company Relief. The 15% surcharge on undistributed profits on professional income should be abolished and the additional 3% USC surcharge on self-employed income over €100,000 should be removed.

In order to help SME’s, we believe the R&D tax credit process should be simplified

[9] Revenue, Normal place of work (revenue.ie)

with documentation requirements and qualification criteria, with a pre-clearance system for first time claimants operated by Revenue. In particular, the requirements set

by Revenue both in terms of scientific merit and documentation are not appropriate for SMEs who often do not have the resources to maintain this level of documentation.

Regarding Capital Gains Tax, the €1 million lifetime limit for Revised Entrepreneurship Relief must be increased.

The Key Employee Engagement Programme (KEEP) is not working as intended by government; the conditions are not fit for practice; the structures used by SMEs and the working practices do not align with the KEEP terms and conditions. For businesses to avail of the system, we believe it needs to be fully reviewed.

The Employment & Investment Incentive (EII) scheme to become more accessible to start‐ups, administering the

scheme must be simpler and less costly for early‐stage companies.

The Chamber believes this could be achieved by introducing a streamlined administrative process including templates and appropriate support from Revenue prior to raising funds.

2.4 Energy and Climate Action Key Asks: Accelerated capital allowance regime to include energy efficient equipment R&D tax credit expanded to encourage green technology

County Kildare Chamber has for a number of years been a strong voice in advocating for sustainability in the region.

In March 2020, County Kildare Chamber, Chambers Ireland, and ICC Ireland announced that we had signed up to a new charter supporting the UN Sustainability Goals (SDGs). Two of these goals, which we have worked to advocate for are the Sustainable Cities and Communities Goal and the Climate Action Goal.

Our Chamber is active in promoting these goals and preparing our businesses for the transition to a greener economy, through our award winning ‘Sustainable Kildare’ campaign and a recent pilot venture between Kildare County Council, County Kildare Chamber and SEAI, both of

which aim to educate businesses and employees on how to become more energy efficient.

Ambition will be needed by all those in positions of power; Government, Local Authority, business sector and the community for Ireland to prosper in a rapidly changing world.

A recent report by the EPA suggested that even if every one of the Governments policies contained within the Climate Action Plan were fully implemented [10], this would still only reduce our emissions by 28% by 2030- falling well below our legal requirement.

910) EPA, News Releases 2022 | Environmental Protection Agency (epa.ie)

Sustainable business practices will be a key action point for Ireland to succeed in its emissions reduction targets. Whilst doing so, it will also open our door to increased FDI offering and our indigenous SME base.

We believe the accelerated capital allowance regime should be updated for energy efficient equipment and the scheme should be promoted at a national level to improve uptake.

The R&D tax credit should be expanded to encourage innovation in green technology, regarding expenditure in wind, solar, hydro or biomass energy. Relief for investment in renewable energy generation should also be included under the EII scheme.

The state will need to increase spending and targeted funding to support making our gas networks transition ready so they can be adapted to supply renewable energy systems, such as hydrogen. Funding should also be allocated to the research of

innovative technologies such as Carbon Capture storage and anaerobic digestion.

A strategic risk assessment of our energy supply and storage is needed to ensure security of supply, should international supply reduce resources to Ireland.

Green energy and its increasing prominence within all areas of Irelands economy will mean as technology advance so to will the training for those supplying the upgraded technology and those transitioning from employment reliant on fossil fuels.

In this regard, the Chamber particularly welcomes support for the implementation of the ‘Local Just Transition Plan for West Kildare’ to identify actions to support and advance sustainable, social, economic, environmental development in the transition to a low carbon future in the West Kildare region.

This region will be most affected by the phasing out of peat fired electrical generation.

Only 5% of new vehicles bought in 2020 in Ireland were EVs, compared to 25% in the Netherlands [11]. Statistically, Ireland has well lagged behind our European neighbours for a number of years when embracing EV technology. This is largely due to consumer concerns around lack of charging infrastructure in the country. On a per capita bases in Ireland, there are approximately 40 charging points per 100,000 [12], however most of these are based around Dublin and the greater metropolitan area. As mentioned in the transport section, County Kildare Chamber supports the accelerated rollout of these charging points, particularly to regional areas.

[11] REA, Energy Transition Readiness Index, Energy Transition Readiness Index 2021 (nnebooks.co.uk) [12] The Irish Times, What’s the state of play with Ireland’s electric-vehicle charging network? – The Irish Times

3.0

CONCLUSION

This budget is taking place at a unique time, in the wake of a pandemic and the ongoing war in Ukraine, yet amid continuing optimism around our economic growth and future policy provision, through initiatives such as the NPF, the NDP and a number of regional plans, all focused on promoting and furthering growth within our towns and cities.

Quality of life, housing availability, infrastructure, transport, sustainable practiced and economic growth will all be dominant topics for the foreseeable future, it is essential for the continued success of Kildare, its communities, and businesses that progress is made in each of these areas.

County Kildare Chamber looks forward to working with the Government and our local stakeholders to deliver a successful outcome for the county, and we are always available for consultation, discussion, and support.

Yours faithfully,

Sinéad Ronan Public Affairs Manager County Kildare Chamber www.countykildarechamber.ie 045 894074

Sallins Road, Naas Town Centre, Naas, Co. Kildare, W91 KV4H Tel: (+ 353) 045 894074 Email: info@countykildarechamber.ie www.countykildarechamber.ie