Dail Éireann · 2026-04-21
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I ask the Minister for an update on the fiscal measures currently in place to support enterprise development and investment in regional towns and rural communities; the further tax-based initiatives being examined to promote balanced economic growth; and if he will make a statement on the matter As the Deputy knows, the Government is committed to balanced regional development and supporting rural communities, as outlined in the programme for Government. At a taxation level, the measures available are generally available nationwide but when they are coupled with the specific expenditure programmes available through the Department of Enterprise, Tourism and Employment, Enterprise Ireland and others, we can see a compelling opportunity for investment in the regions.
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I ask the Minister for an update on the fiscal measures currently in place to support enterprise development and investment in regional towns and rural communities; the further tax-based initiatives being examined to promote balanced economic growth; and if he will make a statement on the matter
As the Deputy knows, the Government is committed to balanced regional development and supporting rural communities, as outlined in the programme for Government. Regarding fiscal supports, a range of tax-based enterprise supports are available to businesses and enterprises across the country, in particular SMEs. These incentives complement more regionally specific direct expenditure measures and schemes overseen by the Department of Enterprise, Tourism and Employment and its agencies. At a taxation level, the measures available are generally available nationwide but when they are coupled with the specific expenditure programmes available through the Department of Enterprise, Tourism and Employment, Enterprise Ireland and others, we can see a compelling opportunity for investment in the regions.
Examples of incentives for SMEs include the employment incentive scheme, start-up relief for entrepreneurs and start-up capital incentives. These reliefs are key supports that help provide SMEs and start-ups with alternative funding sources by incentivising investment in SME start-ups. Another example is the revised entrepreneur relief, which provides a reduced 10% rate of capital gains tax on chargeable gains on the disposal of a qualifying business asset up to a lifetime limit of €1.5 million, a limit that was increased in the last budget. There has also been an increase in the rate of the research and development tax credit from 30% to 35%, and that is being used by many SMEs as well.
As part of budget 2026, we saw the living city initiative, a tax incentive that offers tax relief to regenerate and convert homes and vacant properties. We have expanded that to Athlone, Drogheda, Dundalk, Letterkenny and Sligo, and it is already in place in Galway, as the Deputy knows. The much talked about reduction in the VAT rate for the hospitality sector will disproportionately benefit many rural and regional communities by reducing the cost base for the hospitality sector, which is an important part of the tourism sector. From an IDA and Enterprise Ireland point of view, we continue to promote balanced regional development in every way we can.
The Tánaiste will be aware that the national planning framework proposes to distribute the future population growth of the country equally between the greater Dublin region, the regional cities and the metropolitan areas that surround them. To facilitate that, we need enhanced infrastructure development, and we need to increase housing options for people in those locations. We also need to look at enterprise and fiscal measures to promote the development of industries at home and attract greater foreign direct investment into those regional cities.
I do not think we should rule out targeted fiscal measures at those locations.
There is one other thing I would like to get the Tánaiste's opinion on. We have seen it recently with Dublin City Council. In fact, I think Galway City Council made the initial invitation to or request of the Department of Finance to introduce some type of tourism tax, where the regional or local authority could benefit from additional revenues generated by people coming to spend time in the cities.
Personally, I am very positively disposed to that once it is a matter for the local authority. As the Deputy rightly said, I am a big believer in empowering local democracy. If you run in your community and get elected by your community, you should have real powers. A revenue-raising power is one. If you happen to be a member of Galway or Dublin City Councils - they are two examples - and you say, "Hang on a second, we want to bring in a small tax on a hotel room or the like", that should be considered and people should be given an opportunity to ring fence it. That is very much a matter for local government and I think national government should, if at all, be an empowerment in relation to that.
Infrastructure delivery is key. I am delighted to see the Galway ring road, as I am sure the Deputy is. We have got to get better at delivering critical infrastructure more quickly, particularly in the regions. We now have a very ambitious capital plan but making sure we cut through bureaucracy and planning processes that take too long is going to be key to delivery.
However, unlike we often hear in this House, I think regional Ireland and regional cities are going well. Cities like Galway are doing well. We have got to just make sure we support them from an infrastructural point of view and continue to keep the focus of State agencies on them too.
I very much welcome the Tánaiste's support for the initiative. My understanding of it is that while the local authorities would be the gatherers of the tax, it does require Department of Finance legislative change to try to make sure it is possible and feasible for them to do so. There is a sincerity and a genuine need for it in those cities or regional towns where there are significant numbers of tourists. There is an increased need for services, such as street cleaning at festivals, and all the types of services that visitors expect to see when they come to enjoy these occasions. I am delighted to see the Tánaiste is open to the idea. I hope that we can progress it and allow the local authorities to include it as part of their budgetary framework in terms of revenue generation.
I am very much up to the idea. Generally, people come to this House and come up with ideas on how to spend money. It is refreshing to have people come into this House and come up with ideas on how to generate money. A tourism tax or levy at the very least merits consideration. I say "tax or levy" because they are obviously very different. A levy is something that may not necessarily involve my Department or the Revenue Commissioners; a tax would. There is a whole series of issues that needs to be worked through. The next natural point should be the completion of the review on the powers of local government and local democracy. That might be a useful point at which we can have further engagement. I am happy, in the context of Galway, Galway City Council and the issues the Deputy has raised, to have further engagement or meetings with him on this matter.
I thank the Tánaiste. We have run out of time and cannot take any further questions.