The technology sector is pushing the Government to introduce a new tax credit in this year's Budget to benefit companies engaged in research and development (R&D) in the Republic.
The issue was discussed yesterday at a pre-Budget meeting of ICT Ireland - which represents the technology sector - and the Minister for Finance, Mr McCreevy.
ICT Ireland's submission to Mr McCreevy argues that investment in R&D is essential for the Republic's economic future and that current spending in this area is way below what is required.
The Republic has a low ranking against other developed countries in terms of government spending on R&D, the number of researchers and business spending in the area, according to Mr Peter McManamon, director of ParthusCeva and chairman of ICT's taxation committee.
The tax credit called for by ICT would be designed to encourage new research activity by allowing companies involved to write off the amount against their corporation tax bill through the use of a special credit.
There was detailed discussion about introducing such a credit last year.
While this did not happen, the concept is believed to have the strong support of the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney, and the industrial development agencies.
ICT, which counts among its members all the major firms in the hardware, software and telecommunications sectors, also told Mr McCreevy that the Budget must not add further to business costs.
Preliminary findings from a new national survey on business costs show that non-pay costs for the high-tech sector increased by 17.8 per cent in 2002 and are anticipated to rise by 6.8 per cent this year.
Mr Jim O'Hara, general manager of Intel Ireland and chairman of ICT Ireland, pointed out that, while positive signs are starting to emerge for the high-tech sector, "Irish-based operations of multinationals are under severe scrutiny and there are major concerns about the increasing cost base in Ireland".
This indicated the "absolute need" to avoid any further cost impositions on business, he said in a statement.
ICT is also urging that the Business Expansion and Seed Capital Schemes, used to attract capital into indigenous business, be extended from 2003 to 2006.
The group also believes that the personal and corporate limits for investment in these vehicles should be increased and that section 481 for the film sector should be retained.
