Despite the importance of entrepreneurship for our economy, Irish law and practices systematically penalise self-employment. There is no reason why the self-employed should have to pay more tax than employees, and I support measures to equalise the tax code to ensure that those on the same income pay the same tax. Self-employed persons should also be allowed to opt-in for PRSI benefits. SMEs can also be helped through other easily-implemented cost-neutral measures, such as introducing stronger rent controls on commercial properties, raising the value of claims that can be heard in small claims court and introducing legislation to discourage late payments (a serious impediment to cash flow for some businesses).
I believe in a balanced economy that combines aspects of social provision with free enterprise. That includes supporting the small and medium businesses that account for over 60% of jobs. Being a small business owner can be a struggle at the best of times, but it is particularly hard in a recession.
Commercial renting, especially in Dublin, is prohibitively expensive. While commercial leases can no longer include upward-only rent clauses as of February 2010, stronger legislative rent controls are needed to prevent surplus income that could be used to expand business from draining into rent. I favour a ‘cap and collar’ approach that prevents rents from rising by more than a certain percentage at each review. This approach has been successful in other European countries, and has the added benefit of inhibiting property bubbles.
Details / Frequently Asked Questions
- Why bother with all of this small business stuff when we can just invest in start-ups and create the next Google in Ireland?
A reasonably diversified economy is often more stable than one that relies on one or two specific industries. Tech start-ups have an extremely high rate of failure and those that prove successful are often bought up by larger (foreign-owned) companies. So while technology is good and innovation is good, it is important not to lose sight of other sectors of the economy that may be more suited to being Irish-owned and operated in the long run.
- How could rent control ever work? Wouldn’t landlords just evade any rules?
The excuse that all rules can be evaded is a myth perpetrated by people who do not want the current situation to change. Evasion of laws is extremely easy to prevent simply by continually closing any loopholes as they appear. It would be very simple to pass a law prohibiting the raising or lowering of rent by more than 2.5 or 5%. Such a law could be easily enforced by setting up a complaints procedure to be overseen by an ombudsman with investigative powers (and ultimately the courts).
- How could a payment scheme for late payment be set up?
EU Directive 2011/7/EU was implemented in Ireland through the Late Payments in Commercial Transactions Regulations 2012. These provide for punitive interest rates on late payments as well as a period of 60 days for payment (unless other agreed). However they still leave a lengthy and difficult process for collecting payment in arrears. Furthermore, the 60-day period for payment is too long – 60 days can easily become 100 days or 150 days. Thus, it is possible for a profitable company to be forced into bankruptcy purely via a liquidity problem not of its own making.
Reducing the statutory limit on payment to 30 days would allow companies to react faster to potential late payment difficulties. In addition, Ireland could adopt a streamlined process for late payment collection in cases where no dispute as to the existence of the debt exists. This would cut down on legal expenses for both parties and reduce the period of uncertainty for the business owed.