The Family Business Network (FBN) Ireland welcomes the opportunity to make a submission on behalf of our Board, Executive, and Members to Budget 2025. While the Irish economy continues to experience robust growth, evidenced by a low unemployment rate of 4.2% and continued strong GNI* growth, our members remain concerned about the business climate for family-owned businesses. Key issues include labour availability, rising Government-imposed labour costs, tax competitiveness, and infrastructural deficits.
Family businesses, which employ over a million people across Ireland, face unique challenges compared to their FDI counterparts. These challenges are exacerbated by competitive disparities in taxation and regulatory environments. With global tax structure changes looming and volatility in Corporation Tax revenues, it is crucial for the Government to enhance support for indigenous businesses to strengthen the domestic economy against potential external shocks.
To this end, we recommend that the Government utilise this year’s Budget to create a tax environment conducive to investment and support for entrepreneurship. The most critical issue facing Family Businesses regards the incoming cap of €10m on Capital Gains Tax Retirement Relief, set to apply from January 1, 2025. This new tax measure threatens the viability of family businesses and the jobs they sustain, undermining Ireland’s strategy to support domestic enterprise. Lacking liquid assets to cover these taxes, many owners may need to sell parts or all of their businesses, hindering investment and growth. This change will in many instances delay succession, forcing owners to retain control longer and stifling the infusion of new entrepreneurial energy. Additionally, in many cases it will compel sales to foreign investors, further narrowing our tax base, contrary to the aspirations of the Commission on Taxation and Welfare, which was the genesis of this measure.
Among other asks, we urge the establishment of a Commission on Public Expenditure to evaluate the efficiency and effectiveness of national spending. This will ensure that public resources deliver high- quality services without unnecessary expansion, providing value for money and avoiding additional tax burdens on households and businesses.
In addition, we call for a revision of Ireland’s Capital Gains Tax rate from 33% to the pre-crash level of 20% to foster investment and innovation. This reduction is likely to increase exchequer returns while minimizing fiscal exposure. Additionally, indexing capital gains for inflation will ensure taxes apply only to genuine gains rather than inflation-driven increases.
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Other critical measures include increasing the entry rate to the higher rate of income tax to €50,000, reinstating the 9% VAT rate for tourism and hospitality, and reforming Commercial Rates to support the competitiveness of traditional businesses in the digital era
Furthermore, a new state agency or expanding the remit of Enterprise Ireland to focus on scaling indigenous non-exporting businesses will address the support gap for growing enterprises.
Finally, expediting the Planning and Development Bill, and allocating sufficient resources for its provisions are vital steps to support family businesses and ensure a robust economic foundation across Ireland’s regions and communities.
