More than 90,000 people are employed in the ICT sector in Ireland, which accounts for 36 per cent of total exports of goods and services. Productivity in the sector is high. Between 1995 and 2003, productivity increased by 165 per cent or 13 per cent in annual average terms. This compares with 14 per cent and 1.6 per cent respectively for other industry sectors.
“Momentum is now returning to the ICT sector, with some large-scale job creation projects and R&D investments announced in the past year. However, the continuously decreasing numbers of students in ICT-related courses is a matter of grave concern for the industry.”
McManamon chairs the ICT Ireland Taxation Committee, which prepared a pre-budget submission for the Department of Finance in the run-up to this year's budget.
“It is therefore vital that action is taken immediately to ensure Ireland has in place the skills necessary for a vibrant and sustainable ICT sector,” McManamon said.
“Without a pool of highly skilled engineers and scientists, the ICT sector in Ireland will fail to benefit from the upturn in the sector.”
ICT Ireland and its industry members are making efforts to address this problem through various education initiatives, including schools visits, graduate placement schemes and support of schemes such as Discover Science and Engineering (Forfas) and STEPS (Engineers Ireland programme).
ICT Ireland is calling for a central driving force in government to tackle the crisis immediately in order to derive maximum benefit from all of these initiatives.
“A crucial element in Ireland's competitiveness is its favourable corporate tax regime.
“This is frequently cited by foreign-owned companies as the primary reason why Ireland was chosen as a location over other potential countries,” McManamon said.
“At a time when the global economy remains strained and organisations are making strategic decisions on the location of their operations, any increase in the 12.5 per cent corporate tax rate would be detrimental to our chances to retain and attract foreign direct investment (FDI) to Ireland and would also reduce our competitiveness.”
The reduction in corporate tax rates has been of tremendous benefit to the government in terms of yield. Ireland derives a higher proportion of its tax revenues from corporate income than either the OECD or EU 15 averages, according to McManamon.
ICT Ireland therefore supports the commitment from the government to retain Ireland's low corporation tax rate and to resist any EU attempts at tax harmonisation or introducing a minimum rate of corporate tax in the EU.
If Ireland is to become a true knowledge economy, it is essential to provide universal access to technology in order to enhance citizens' interaction with both business and government.
While Ireland is considered a location of excellence for ICT, there is an increasing awareness that lack of access to ICT is creating new social divisions in our society and, in particular, among our young people. Furthermore, it is becoming increasingly evident that basic IT skills are essential in a majority of roles in today's job market.
In order to deliver productivity increases within the public service it is desirable to offer an increased level of e-government services. Developments in online public services such as Revenue On Line (ROS) and car taxation have resulted in better communication between the government and the citizen.
However, it is impossible to secure this opportunity when PC penetration rates in Ireland remain so low. It is therefore necessary to accelerate PC penetration in order to maximise this opportunity.
ICT Ireland is calling on the government to implement an innovative tax model to encourage the purchase of personal computers and broadband uptake in the home as a step to provide wider access to technology.
Ireland's loss of competitiveness is a key issue for the ICT sector. Unless issues such as skills, business costs, and e-literacy are urgently addressed, Ireland will no longer be recognised as a competitive location for ICT activity (both foreign and Irish-owned companies). In summary, ICT Ireland recommends that the government address the following in order to ensure that Ireland secures its position as a worldwide leader in the knowledge economy:
- work with industry in addressing the serious decline in the uptake of ICT courses at third level;
- give a clear commitment to retain our existing corporate tax regime and resist any pressure towards EU tax harmonisation;
- implement an Employee PC Purchase programme with an innovative tax model to provide wider access to technology in the home and in society;
- work to maximise the potential of broadband in schools through a clear follow up plan on content and skills;
- put in place domestic legislation to address the foreign tax credits system.
ICT Ireland is of the view that government must also address the following issues:
- support R&D & Innovation;
- avoid any further changes in the PRSI system that would impact negatively on payroll costs - in particular the employees' PRSI ceiling should be retained;
- support the European Commission proposal to have the Vat rate for Business to Consumer (B2C) electronic transactions applied at the point of consumption.
Quelle: The Sunday Business Post, 30.10.2005
