Election 2025: What should the next Government be focused on for Businesses?

Even before the election was called this morning there were plenty of pundits wading into ‘the vision thing’ for Ireland so here are some thoughts from the Partners at Baker Tilly on what the next government of whatever colour should be focusing their attentions on.

The Importance of Foreign Direct Investment (FDI)

“It’s FDI, stupid” to paraphrase a 1990s US election slogan. We are a relatively small country – we need FDI money to keep flowing in whether it is from the US or from other parts of the world including China. Over 80% of our corporation tax receipts and over 50% of our payroll tax receipts are generated by these companies. That money benefits all of us – consumers, savers, workers. We must not lose the golden goose. 

This will require a long hard look at our infrastructure challenges over the next decades and some of the well documented planning restrictions that can frustrate international businesses when they are looking to set up in Ireland.

Supporting Businesses and Entrepreneurs

We believe the Budget missed an opportunity to champion the businesses we advise and the entrepreneurs that the government talks so much about. There was very little improvements to capital gains tax rules to encourage either. The cost of establishing and running a business continue to spiral. We would strongly support calls for improvements to entrepreneur relief to reward business owners and an easy to use share based remuneration scheme to allow those businesses retain and reward key talent. The Budget referred to four major issues that could make a real difference: Share-based remuneration, the R&D tax credit, interest deductibility and the tax climate for the funds sector. 

However, in all four cases, the government opted in the Budget to only reference new and ongoing reviews rather than introduce any new tax policies. . We think these should be top priorities for any incoming government to show some real tangible decisions from these reviews.

Revisiting Airport Capacity and Planning Regulations

The airport cap has highlighted a key issue with planning law and regulations in Ireland. This 17-year-old rule was introduced when Terminal 2 was built during a very different era. With a growing population and the improvements to airport infrastructure this cap should have been lifted many years ago. We understand the need to manage this also in line with an environmental objective but we also need to be mindful of the business travel that is crucial to maintaining our FDI and ensuring we support our hospitality sector which certainly felt forgotten and overlooked in the recent Budget. 

We need to boost the number of tourists and investors not potentially put them off by higher air fares and less flights. After all, when Ryanair and Aer Lingus are singing from the same hymn sheet you know something is a serious problem. 

Addressing Housing Challenges

Turning more inward looking there is no doubt housing will be a key battleground during this election and a key focus for the new government of whatever political makeup. In the recent budget the Government outlined a roadmap for how current and future consideration from bank share sales will be allocated, emphasising a strong commitment to infrastructure spending. 

This investment is critical for achieving Ireland’s ambitious housing targets, with all agencies and commentators signalling that 60,000 new housing units will need to be completed annually to address the chronic undersupply. However, despite these good intentions planning delays and increased building costs remain significant constraints to meeting these targets. Some builders will not be able or willing to commence building unless they know they can deliver houses and apartments which people can afford to buy. In addition to the generous budget allocations, planning regulations need to be closely examined and overhauled.” 

Conclusion

In conclusion, the next government of Ireland has a unique opportunity to steer the country toward a more prosperous future by prioritising FDI, supporting entrepreneurs, revising outdated regulations, and addressing the pressing housing crisis. By focusing on these key areas, the government can not only foster economic growth but also create a more sustainable and equitable society. 

Immediate, actionable policies are essential to ensure that Ireland remains an attractive destination for investment and that all citizens can benefit from the opportunities that arise in a thriving economy.