George Lawlor Calls for Employee Ownership Trusts to Protect Irish Firms

I spoke very, very briefly to you during the week on this and we had a very good meeting with Minister Peter Burke on the whole area of Employee Ownership Trusts and my next step was to meet with your predecessor, but unfortunately he has gone to Pastors, very new and Pascal's new Pastors, but certainly I believe this is a win-win scenario. If you just look at the statistics, every working day this year an Irish company has been sold into foreign ownership and if you contrast that with the UK situation, 10 companies a week transfer to Employee Ownership Trusts and the very simple reason they do that is because the taxation situation is much more favourable in this whole area. There is one company, only one company in Ireland who has sort of decided to dodge the tax, not dodge the tax, but dodge the tax pitfalls and work around it. One company only and it's owned by a man called Alan Coleman of a company called Wolfgang Digital. That is the only company at this point in time that has decided to enter the Employee Ownership Trusts and to date he is reporting an increase in productivity amongst the workforce, much greater interest amongst the workforce in terms of the company itself. The famous John Lewis company in the UK is an EOT, an Employee Ownership Trusts. I think that's an example of the type of company that we need to be retaining in Irish ownership. Alan Coleman has told me that once you reach a particular turnover threshold, the phone calls come from all over the world in relation to buying out the Irish companies. And I suppose with the geopolitical situation we find ourselves in at a minute and the changed world in terms of economics and trade, I think it's imperative that we do all we can to retain Irish companies in Irish ownership. And so as I said, this is, and it's tax neutral relatively because the fact that it's not happening, it's tax neutral and ensures that Irish companies stay in Ireland and stay, the workforce have the interest and interest in extra productivity to do that. There's a number of areas that need to be looked at. But as I say, it is tax neutral, the area of capital gains tax relief, we would be asking to introduce, as is the situation in the UK, introduce full capital gains tax exemption for business owners who sell a controlling stake, typically 51% or more, to an EOT. And that's similar to the UK model. We remove discretionary trust taxes to eliminate the punitive taxes applied to employee ownership trust structures, which currently treat them like discretionary trusts rather than succession vehicles. And the area of succession is also a difficulty here, where family businesses, where there is no interest within the family any longer in the ownership of the business. And that's where EOTs could come to the fore also. We need clarity, of course, on any anti-avoidance rules. We need to provide clear guidance so that employee ownership transactions are not penalised under existing anti-avoidance legislation. And, of course, there also is employee incentives with annual tax free bonuses being made available. So there are also PRSI and USE adjustments. But essentially this is a tax neutral proposal, which I believe will give tremendous clarity to companies who find themselves in a situation where they are being approached and bombarded from outside the country by agencies who are only interested in the profit margin that they can achieve by purchasing the Irish companies. And certainly I think it would receive cross-party support in general. As I said, the meeting with Minister Bourke was very successful and his next recommendation was to square it up by meeting the Finance Minister in regard to the proposals that are required. But I believe it is something that we really, really can benefit from and I would urge you to support. Thank you Mr Tarnished.