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Budget welcomed for pro-research measures
08-12-2005
by Charlie Taylor

IT organisations have welcomed Budget 2006 for its creation of a fourth level of education, although more action had been hoped for on R&D tax credits.

In addition to praising the Government for its pledge to introduce a PhD educational level and increase investment at 3rd level, ICT Ireland also welcomed Brian Cowen's commitment to retain the corporate tax rate of 12.5 percent.

"Investment in education is absolutely necessary if Ireland is to develop as a true knowledge economy. An increase in the number of PhDs will allow Ireland to compete globally for mobile R&D investment as well as creating a favourable environment to stimulate R&D in the indigenous ICT sector", said Kathryn Raleigh, director of ICT Ireland, in a statement.

However, the organisation did express concerns that the present administration had missed an opportunity to address the falling number of students choosing science, engineering and technology at 2nd and 3rd level.

Raleigh said that both industry and government have to act now to be sure more students choose technical subjects, or Ireland may be unable to fill the extra PhD places arising from the current budget.

ICT Ireland also raised concerns over the Government's failure to announce any detailed measures on the R&D tax credit scheme, which it claims has a number of shortcomings.

The Irish Software Association (ISA) also welcomed the decision to create a new educational level and it praised Brian Cowen for reducing the burden on VAT registration thresholds for goods and services companies, saying that it was of significant benefit to small firms.

Nevertheless, as with ICT Ireland, the ISA expressed disappointment over the Budget's failure to address the expansion of the existing R&D tax credit system.

"Initial feedback from companies indicates that the R&D tax credit scheme introduced in 2004 is not having a material impact on the level of R&D activity," said Michele Quinn, director of the Irish Software Association.

"The sector had hoped that the Government would use this opportunity to review the scheme and introduce measures which would assist more SMEs to qualify under the system," added Quinn.

The ISA also called for the Finance Bill to clarify the Government's commitment to both the Business Expansion Scheme and the Seed Capital Schemes, neither of which were addressed in Budget 2006.